I recently attended a closed-door meeting with some of the brightest minds in our business…
Darn near everyone was laser-focused on one topic. Over and over again, I heard variations of, “It looks like the market is due for a correction.”
Here’s the thing… I agree. Stocks have had a pretty good run. And it’s starting to feel like a pullback will happen soon.
Maybe your “spidey senses” are tingling too. Do you think a correction is near? And more important, what do you plan to do about it?
Well, if you’re investing, and your plan is to get the most out of this Melt Up that you can, I have one word for you. Stop.
Seriously. Just stop.
If you want to ride the Melt Up, you need to “zoom out” at times like these – and make sure you’re looking at the big picture… Regular DailyWealth readers should know the Melt Up thesis well by now. My mentor and colleague Steve Sjuggerud developed it.
The idea is pretty simple. But it’s one of the most powerful themes in finance right now.
A Melt Up is the furious final push of a manic market before it collapses. It’s an event that can produce life-changing investing returns. And it happens fast, often in just a year or so.
What’s more, Melt Ups are fueled by low interest rates and easy money policies. There’s no question, that’s the environment we’re in now.
We’re also seeing one of the key hallmarks of a Melt Up right now: retail-trading euphoria. I wrote about this yesterday.
So, we know that a Melt Up scenario is in place, and that it’s likely the market can soar to astronomical levels from here.
Despite that, I was in a meeting full of analysts fretting over a potential 10% correction. And I was right there with them. But I realized my own nearsightedness.
It’s easy to get tunnel vision when you spend all your time looking at the markets… But don’t let that “expert’s mindset” fool you.
We’re here to invest… not flail at trading market volatility. The simple truth is that Melt Ups come with volatility. Corrections are normal. The chart below shows it…
The Nasdaq fell roughly 10% five times on the way to its final dot-com era peak. Yet when most folks talk about that boom, they describe it as a steady run higher. They only remember the volatility on the way down… not the volatility on the way up.
Imagine if you’d gotten out of the market right after the first correction. Or the second. You would have missed out on life-changing returns. Worse still, maybe you rode the tech bubble all the way back down… waiting for things to turn around.
Short-term thinking and a lack of strategy can produce results like that. Don’t fall victim to losing sight of the big picture.
Right now, the data says we’re in the midst of a Melt Up. So while a correction could be looming, it’s likely nothing to worry about.
Good investing,
— Vic Lederman
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Source: Daily Wealth