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Be Greedy When Others Are Fearful

This has been a tough year.

For one, the markets are blowing up. It’s not the worst bear market for stocks. It’s not “financial crisis” bad when stocks tanked more than 50%. But stocks are still down over 20% this year.

What makes the markets so bad is that everything is bad. The bond market is down 20%. Gold is down 20%. Everything's down 20%. There's no place to hide.

Now, if you go back to 2008, there were places to hide. If you were all-in on Treasuries, you did fine. If you were in gold, you were up.

The current bear market is a different story, though. It’s such a difficult environment to navigate, and I don't see anybody taking victory laps this year. Everything is getting killed. The only thing that hasn’t crashed is cash—but with cash, you’re not keeping up with inflation. It’s a horror show.

Even the Awesome Portfolio is having its worst year ever. I ran the numbers two weeks ago, and it’s down 10.5% this year. The previous low was in 2008 when it was down 9.2%.

You know it's a bad year when the Awesome Portfolio is getting hosed. But hey, at least it's doing better than stocks. And under the circumstances, it could be a lot worse.

Reengage with the Market

I'm not seeing people selling stocks. I'm not seeing anyone buying stocks either. What I'm seeing is people paralyzed with fear and inaction. They're not even really paralyzed. They're disengaged from the market. They’ve stopped paying attention. They're off doing other stuff.

Keep in mind, this bear market has been going on for almost two years now. Bear markets usually don't last this long, and I think this one is coming to an end soon.

This is the time of the year when seasonality kicks in. Historically, October is a bloodbath, but then it starts getting better after that. And if you look at election cycles, you want to buy stocks right before midterms. That's always the best time to buy.

Remember, you want to be greedy when others are fearful. And there's a lot of fear out there right now.

It’s time to back up the truck.

Don’t Panic—This Is Temporary

This isn’t a full-blown crash. Despite what some knuckleheads out there are saying, I don't foresee any scenario where the stock market goes down 50%.

It’s not going to happen, so don’t sweat it.

Just keep doing what you're doing: Get a paycheck and keep funding your 401(k). Don't stop contributing to your retirement accounts. Keep mailing in those checks.

This is temporary. It may not seem like it's temporary, but it is temporary.

Jared Dillian
Jared Dillian