Right, I know what you’re thinking, that isn’t very helpful. What am I consistently doing to get ahead while my account seems to fall further behind? Well, to answer that we’ll have to discuss a few different thought processes. Grab a sprite(if you can find one) and let’s gooo!
Ok, Ok, I admit, there isn’t really any big secret here. What I do have for you however is a guaranteed way to come out ahead when this bear market does finally break to the upside. In fact, I have two guaranteed ways to come out ahead.
- Buy, Buy, Buy as many shares of good companies as you can
- Ignore reddit, social media, and the news outlets
That’s it, sounds rather benign, doesn’t it? I know, you were expecting something more eye popping or a strategy that says do this when that occurs or do that when this occurs. I am sorry to disappoint you but if you give me just a few paragraphs I’ll explain why those two pieces of information are all you really need to know.
Sizing up the 2022 Bear Market
First, consider this, what if the 2022 bear market makes history as the longest bear market on record? Possibly reaching well into 2024 before we see this bearishness start to ease. I suggest such a bleak outlook based on a few different criteria but mostly because I think the wealthiest generation in American history is ready to retire.
With potentially more sellers than buyers, the price must fall to a point where buyers are willing to step in. The more they sell, the lower the price will go. Additionally, I believe the reason we haven’t seen much in the way of panic selling is because this time around fear isn’t driving the decline. Wealthy retirees are. Let me explain, when people retire, they don’t want 1 trillion dollars sitting in a bank account. No, they want a consistent amount each month, quarter, or year to finance their golden years and in that light it would make sense for the 2022 bear market to last much longer than anyone is predicting.
With consistent but unwavering withdraws of increasingly larger amounts than at any time in history I’m suspecting that the 2022 bear market has longer claws than most, if not all of it’s predecessors. Add to that, record breaking economic stimulus and the unwinding of such an affair and I think it’s clear we’re in for a quite a ride.
Why the Bear Market is the Best Thing to Happen in Our Lifetime
With that out of the way, look around yourself, in the world, not your office in the spare bedroom. What you’re seeing are prices going up and staying up on literally everything. All the experts are claiming it’s only temporary before things calm down. The reality is, they’re right, but only kind of. In my opinion, things will calm down but calming down and going down are two very different statements.
I think it’s fair to say that gas going from $5 gallon to $4 a gallon is, calming down. Gas going from $5 a gallon to $2 a gallon is, gas going down. See, what we’re living through right now is a complete re-pricing of virtually every product or service. Those products or services drive the profitability of the companies we invest in. Additionally, the “re-pricing” isn’t just on goods and services, it’s also impacting labor rates. I.E. we’re getting pay raises to match the new price of the world around us. And while we don’t get any further ahead, we sufficiently inflate everything else, including asset prices.
Basically, prices are being inflated at a pace we’ve not seen in our lifetimes. When the overwhelming amounts of money flowing out of the market begin to wain and buyers do eventually step in. Then, I believe we’ll see the market move even higher than we can begin to understand at this particular juncture.
Buy as Many Shares as You Can
That’s why I believe now is the time to buy as much as you possibly can into those companies you believe in. Imagine for a second Apple doubling or even tripling in value from it’s current price. Hard to believe, I know. The truth is, it will, but not because Apple is breaking any new ground (although they might). Rather, because the prices they’re charging are marching ever higher. It’s only a matter of time before the stock chart shows the exact story I’m describing to you here.
Considering Apple, just imagine back to that first Iphone you bought. Likely the Iphone 3 or 4, remember how floored you were to find out the cost back then. It was around $300 dollars and all of us said the same thing, “for a phone?”. Those same phones, by today’s standard, are closer to $1,000 and somehow we don’t so much as bat an eye. Moreover, 5 years from now, we won’t hesitate to pay $1,500 for essentially the same device we have today. That’s what we’re seeing on a global scale.
Companies are raising the floor on everything from skittles to sky scrappers. It’s only a matter of time before it’s reflected in the share price. While Apple has been getting away with this for years other companies haven’t been quite as lucky. Until now, that is.
Therefore, I think the smartest thing we can do is buy as many shares as we possibly can. Buying them at today’s rate before the share prices accelerate to the “new” fair price we’re all currently experiencing.
Here’s an interesting article about the bear market we’re in right now. Fortune.com: How long bear markets typically last—and how you should think about investing during this one
Ignore the Media
Finally, probably sound advice for every aspect of life. Don’t listen to the media! Largely, they only tell you one possible avenue of truth because more often than not they don’t have all the facts. They’re tasked with creating stories, if that story can be generated without knowing all the details, so be it. They’ll just release subsequent stories to tell the untold portion of the previous story that you may never get.
Thus, what we end up with is a skewed version of where we stand as an economy, where our investments stand, and what we should be doing about it. Time (and Warren Buffett) have shown us that when everyone else is selling we should be buying. Which is exactly what I’m doing with every dollar I can free up.
Should I choose to listen to what the media is suggesting I’d be sitting in cash as I wait for the bear market to subside. Additionally, I just love how they say it like, don’t worry, we’ll be right here to tell you when its safe. The truth is, they have no idea when it’s safe and they certainly won’t be telling us its safe until well after a recovery is underway.
The alternative is to just do what we know makes sense. Ignore them and buy good companies at today’s rate. A discounted rate by today’s dollars at that. Sit back and relax as new prices flood every corner of the market. Watch as your net worth climbs to heights you could never begin to imagine.
Who knows, luxury items like personal jets may just be a reality for those willing and able to move one step at a time, head on into the 2022 bear market.
God bless,
Jeff
