The stock market will crash, it has happened time and time again so let’s discuss how you can profit from it - Enjoy!
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#1. The Honeymoon Phase
Just think about when someone you know got married, they were probably totally obsessed with each other as everything was just so new and exciting.
This is very similar to the stock market, when I start seeing this blind happiness I prepare my investments for when everything comes crashing back to reality.
THE WARNING SIGNS:
First was the boom in consumer spending. Everyone had money, they were spending thousands & the economy was thriving.
The second thing I noticed in 2008 was the increase in the number of people buying houses or refinancing. This is because it was easier than ever to get credit as the housing market was booming.
HOW TO PREPARE:
First I would evaluate and minimize your risk level wherever possible. Personally, I’m not focused on chasing crazy high returns as that’s unsustainable for the long term. I just want to be making small gains consistently so my money compounds.
Secondly, I would start to reduce my leverage. Now on the one hand leverage is a great way to accelerate wealth, but it can also be very dangerous.
Thirdly I would start saving some extra cash in a high-interest savings account. I know I always bang on about having an emergency fund of 3-5 months of your living expenses but I am talking about saving even more.
Finally, I would make sure my investments were properly spread out. This is called diversification, and it’s one of the best ways to help withstand a market crash as quite simply put, you haven’t got all your eggs in one basket.
#2: The Awakening Phase
Next comes the awakening phase, I like to call it this as everyone gets rudely awakened to the truth, and only the ones that know how to navigate it will be able to hold their nerve and make some money.
Even if you manage to predict all the signs of a crash and prepare correctly, this is where you are really tested. It’s more about human psychology as most people’s initial reaction is to sell all their investments and cut their losses.
A study by fidelity actually found that if you invested $10,000 between the first of January 1980 and the 31st of march 2020 and if you kept your money invested, you would have over $697,000. But if you decided to sell your investments and ended up missing the 5 best trading days then you would have over $432,000. The crazy thing is that missing just 50 of the best trading days brings you all the way down to $48,000.
So you might think you are being smart by timing the market but in the long run, you are probably only going to hurt your own profits.
The bottom line here is that while some chose to panic sell, and lose all their money, others chose to double down and buy the dip, which If done correctly can make you a fortune.
#3: The Resurgence Phase
After weathering the storm we get to the resurgence phase and this usually pushes above and beyond the last market highs!
One of the key lessons I took from all of it was that a bull market almost always follows a bear market and that the seeds of your fortune are very often sown in times of crisis and uncertainty
As long as you are able to handle your level of risk and you are buying into the stock market consistently with a diversified portfolio then you stand a much better chance than most at making some real money!
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*Some of the links and other products that appear on this video are from companies which Mark Tilbury will earn an affiliate commission or referral bonus. The Info in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.