How to trade the stock market with zero fear
– by Ryan Henry of TrendLizard.com
How many folks were too gun shy to buy back into the stock market in 2009 when the recovery began? The market had just been lopped in half by one of the sharpest market cleansings that ever occurred. Certainly, the recovery that followed it was a tough one to trust. But then it just kept going. The Dow went from 6500 to 11000 in about a year, without taking as much as a breath. Without an understanding, it’s hard to make bold moves in the market. Heck, I still know folks who are afraid to get back into the market, instead taking the 50% of their portfolio that survived the crash and stuffing it into more risk-averse assets to avoid further destruction. After missing the sharpest portion of the recovery, they convinced themselves that either the market must now be too high, or simply that anything can happen and it’s not worth the risk. As a result, they changed their retirement plans to suit their new realities. In my mind, that’s a tragedy.
Whether we like it or not, the stock market is still the biggest wealth creation machine on the planet. Where else can you get a 176% return in five years, as the Dow has achieved over the past five? Obviously that’s not the norm, but it is what the market is capable of. It doesn’t matter if you trade daily or simply want your 401(k) to keep moving in the right direction. You cannot live in fear of the market; it is too big of an opportunity to pass up. I don’t care if you are planning on retiring in one year or forty; if you want to live comfortably in the late years, you have to be properly exposed to the market. And to do that the right way, you need to understand it. But that’s why we’re here, right? I’m not suggesting you learn how oil prices and interest rates affect the yen or how to break down an income statement 28 different ways. Completely not necessary. Instead, you just need to understand that market trends are powerful forces that are hard to stop. You need to understand that there are objective ways to identify and trade only the strongest trends, and that you can enjoy great success doing so. Maybe most importantly, you need to understand that your risk can be very well-controlled, and that there is nothing to be afraid of. It’s true that another massive market decline could occur. But not once has such a move occurred directly out of an uptrend. There are always cracks in the dam before it bursts. In fact, it’s significantly more likely that we’ll be trading the short side of a market that is about to fall apart than the other way around.
That is why we are here. If you follow our work on TrendLizard.com, you know that we have consistently participated in the biggest trends the market has to offer while avoiding even a single big loss. That’s not because I’m some incredibly smart Wall Street guy with an inside track. It’s because our trading system is built to let gains get big will keeping losses small. When the market gets stagnant, we end up with a smaller portfolio without even thinking about it. When things are moving, naturally so is our portfolio. There’s nothing to fear because it’s out of our hands. We will be pushed out of the exit when things like the 2008 crash occurs, and we’ll be forced in the front door when things like the 2009 recovery take hold. Then, your retirement plans will change to suit a new reality, but this time it will be for the better.