The Biggest Danger to Your Profits at a Time Like This

Traders and investors are just sticking their toes back in the water as I write this on Wednesday morning; Tuesday's "up" close was the first in three sessions.

The crowd, of course, is spooked by the inverted yield curve that developed late last week. From the minute the selling started, the media marched out a familiar cast of characters...

... the Wall Street analyst advising watchers to "Sell! Sell! Sell!" - while her buddy on the trading desk across the room chomps at the bit to "Buy!" at fire-sale prices...

... the pundit who's predicted 12 of the last three recessions (and who's never managed a dime of capital in his life) calls for - you guessed it - another recession, due to begin at 2:04 p.m. sharp...

... and on... and on...


The truth is, you're meant to think the wheels have caught fire and fallen clean off!

But of course, we know better. And with our risk-balanced "50-40-10" approach to investing, we sleep better, too - but that's a story for another day.

Now, with all that said, there is a very real risk in this situation, though it's not what you might think...

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The Real Danger: Missing Out from the Sidelines

The chatter of "permabears" never really stops, though it does grow decidedly louder at times like this.

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No doubt the cacophony was deafening late last year... "Go to cash," cried the bears for any number of reasons. And unfortunately, many did.

Lipper Research data shows that investors took nearly $200 billion out of stocks and put it into money market funds during Q4 2018. The last time we saw numbers like that was 2008, during the height of the global financial crisis.

Over the past few days, according Bank of America Merrill Lynch, using data from Emerging Portfolio Fund Research, investors have yanked some $20 billion out of stocks.

I can only shake my head, wondering how many missed the best start to a new year in decades, and all the gains that have come since - a 12.3% rally that's created an entirely new crop of millionaires already.

They stand to miss out on what we're perfectly positioned to capitalize on.

That's because stocks like those we recommend all have one thing in common: They tend to rebound very quickly following corrections. That's why it's critical to stay on board and focused on what happens next instead of what's behind you in the rearview mirror - like most investors.

Case in point: Stocks have averaged a gain of 47% over the succeeding 12-month period following a decline of 20% or more for the last 93 years... since 1926, in fact.

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And the best stocks?

Those tend to do even better, which is why I go out of my way to recommend companies like Raytheon Co. (NYSE: RTN), American Water Works Co. Inc. (NYSE: AWK), and Becton Dickinson and Co. (NYSE: BDX).

All of those holdings sit in the envied "free trade" portion of our model portfolio, having tacked on 388.58%, 289.06%, and 278.54% respectively since recommending them in the Money Map Report. We've long since recaptured our principal and are now using the "house's money" to make even more for ourselves!

I made two recommendations for the Money Map Report family recently from which I expect returns as big or even bigger.

Even if the volatility does continue a bit or if it subsides to return further down the road, I expect the best stocks to attract capital and the weaker ones to shed it - especially if some great news comes around like a final trade deal between the United States and China.

I know it's tough not to panic, but resisting the urge to sell everything and run for the hills is critical if you want the big profits that accompany the volatility other investors fear.

"Buy low and sell high!" It's a maxim for a good reason.

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About the Author

Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.

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