This year, we had one of the worst Octobers in the past decade.
Prices took some huge hits that month, and many folks under 35 have learned, for the first time in their lives, that stocks can actually go down.
It's a little scary if you have never seen this type of price action, but I've seen it so many times that, so far, I have not paid much attention.
The market has not offered a bunch of bargains yet, so there is not much to do at the moment. But personally, I am hoping that changes soon.
At my house, we don't celebrate new highs.
We expect new highs to happen, as we know that human nature itself means we are all going to want to strive to build a better life for ourselves and our families. That striving leads to innovation and growth that provides an upward drift in the equity markets over extended periods of time. It happens all over the world, but nowhere is it more evident than here in the United States.
Instead, we celebrate these occasional violent down moves.
These market downturns cover Wall Street in blood and vomit, while Main Street huddles under the kitchen table in fear, cuddling a bottle of cheap gin.
But that's when fortunes are made.
And that's exactly how one lone, miserly woman, known as the "Witch of Wall Street," made her fortune.
So today, I want to introduce you to that woman, and share with you exactly how you too can spot those opportunities...
The Richest Woman of the Early 1900s Reveals How to Buy Bargain Stocks
Hetty Green, who we will talk a lot more about here in the years ahead, became the richest woman in the world back in the early 1900s.
It was all because of her genius investing strategy.
As she told us, "When I see a thing going cheap because nobody wants it, I buy a lot of it and tuck it away. Then, when the time comes, they have to hunt me up and pay me a good price for my holdings."
This man makes more money than he knows what to do with – and you’ll never guess how…
Smart woman.
As dismal as last week felt, we are nowhere near the bottom yet.
When we get there, the Melvin clan and its associated members will break out the Pappy Van Winkle and Opus One. But we are not there yet.
Will we get there this time? I hope so – but the truth is I don't know.
How will I know?
It's simple, really. The numbers will tell me.
Here's When the Numbers Alerted Me to Buy at the Bottom in the Past
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One of the best investors I have ever known used to tell me that his personal slogan was "I love the smell of napalm in the morning."
Following the numbers will give you the courage to buy – even at times when fear is so thick in the air that you can hear the helicopters low on the horizon with "Ride of the Valkyries" playing at deafening volumes.
Times like 2002, when tech companies were selling for less than cash, and when bonds of financially viable communication firms were trading for $0.50 on the dollar.
Or like 2004, when REIT prices fell in response to a Fed rate hike – an idiotic response by market participants – and we saw real estate holdings outperform the markets by more than a 2-to-1 margin over the next two years.
Or even times like 2009, when it looked like the world was going to end as companies like The Walt Disney Co. (NYSE: DIS) and Corning Inc. (NYSE: GLW) were selling for less than my estimate of their liquidation values – yet the numbers were cheering and breaking out the bubbly.
The only way to have the kind of financial courage to buy at times like these is to rely on cold, rational numbers, not warm fuzzy instincts.
Warm fuzzy instincts are what Wall Street exploits to sell you garbage and get you to act in their interest and not your own. Don't use those.
Rather Than Trust Warm Fuzzy Instincts, Rely on These Cold, Rational Numbers
Here's how to rely upon the numbers...
We have four "buckets" in our Sabermetric approach, covering various types of investments.
When a particular bucket has a greater-than-average number of potential opportunities, we are nearing a bottom. Soon enough, good things are going to happen to patient, aggressive investors who swallow back the fear and take the plunge.
The Markets Could Plummet… and you could still make thousands. To learn how to get the chance for at least 50 triple-digit winners this year, no matter what the markets are doing, click here.
When a bucket has a below-average number, and when it looks like a stock market rally will go forever and ever without end, it's getting close to the end. The party is hitting high gear, and the cops are on the way. Staying means at best a hangover, possibly divorce threats from your spouse, and at worst, lifestyle jail.
What is lifestyle jail? It's the feeling of financial handcuffs, when you lose so much it's hard to live the life you choose. It is not a nice place, so let's avoid that if we can.
Where are we now?
Two buckets, our buyout bucket and banks bucket, have pretty limited opportunities at the moment, and the number of companies is well below average.
Our infrastructure bucket has some opportunities, and we can expect to be adding to that pretty soon.
And our final bucket, the real estate bucket, currently offers some pretty exciting long-term opportunities.
Last week didn't bother me much, as the numbers have been telling us for some months now to tread carefully, and focus on only the very best companies and assets.
For those looking to buy the dip, you might want to keep in mind that the numbers are not very excited at the moment. We have rallied a very long way and would have to retrace a good portion of that for the Pappy and Old Reds to come out of the cabinet.
Relying on the numbers is not a precise mechanism for timing the markets. Sometimes it takes longer than I like for prices to begin to move the way the numbers say they will, but 100% of the time over my career, they have eventually been proven right.
To learn more about my track record, which utilizes the Sabermetric approach, click here.
I would rather rely on the numbers, endure the short-term pain, and eventually be proven right than follow my instincts – or the Pied Pipers of the Thundering Herd of Wall Street – and have my retirement plans dependent on the kindness of strangers.
In Case You Missed It: See How to Conquer America's Most Controversial – and Lucrative – Industry
He was once marijuana’s biggest enemy… but now, former Speaker of the House John Boehner is advising Americans to go “ALL IN” on cannabis. To see his entire shocking prediction, click here.
The post The "Witch of Wall Street" Reveals Why We Should Celebrate This Market Turndown appeared first on Max Wealth.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.