What To Do When You’re So Bearish It Hurts

I’ve learned to sidestep the pain by doing two things. [Jeff Clark's Market Minute]( What To Do When You’re So Bearish It Hurts By Eric Shamilov, analyst, Market Minute If you hang around Wall Street long enough, eventually you’ll hear the phrase… “I’m so bearish it hurts.” Investors feel this when markets take an emotional turn to the upside and traders start building short positions. Everything confirms their view… from data that contradicts a “dumb” narrative to observing the wild-eyed craze taking hold of the same folks you couldn’t force to buy a thing at the lows in June. Conviction starts building up as data confirmation rises. And the feeling that they’re about to catch the market off guard begins to percolate… Recommended Link [Successful trader’s #1 Rule? Diversification is for dummies]( [image]( Market Wizard Larry Benedict’s debut on the financial research publication scene is already controversial… “Diversification is for dummies,” he said. But Warren Buffett has said the same thing: Then added, “Why would you put your money into your 20th choice rather than your first?” Around two-thirds of Berkshire Hathaway’s portfolio is invested in just four stocks. That’s why Larry’s first rule is: to focus on one ticker. He’s been featured in the popular trading book, "Hedge Fund Market Wizards, How Winning Traders Win…” Earning the coveted title “Market Wizard”. And finally, he’s sharing his secret to success with everyday folks. [In his debut video here]( he shows you what he does… and how you can do it too. He even shares the name of the ticker and how to trade it. [Watch it here.]( -- Now, everything is lining up, except price. So, it literally hurts – and I’m speaking from my own experience right now. But I’ve learned to sidestep the pain by doing two things… - I always remember the emotional nature of the stock market. It’s the direct cause of miscalculating downside bets. There’s always that little bit of extra time it needs before it let’s go, even when the writing is on the wall. - I always force myself to buy at least something… I don’t “throw the baby out with the bathwater.” For example, the problem of timing is best seen with the 2000 tech bubble… When the Nasdaq started falling in March 2000, the first tranche of the collapse came quick (like it did this year). Back then, it fell 36% from the highs and this year it fell 33% (similar price paths). Next, came the 70% retracement of the move back to the upside. A Fibonacci retracement overlay works well for this type of analysis because it connects any two points viewed as relevant, typically a high point and a low point. So here’s a chart of the Nasdaq 100 Index in 2000… [(Click here to expand image)]( As you can see, it took a few months for the market to show its bluff hand at the poker table. And when it did, it dropped a tremendous 80%. Now, we’re going through the same thing. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just [click here]( to check it out. [On August 12]( I wrote about the big mistake stock investors are making… which is operating on a narrative that the bond market is rendering obviously wrong. As I’ve mentioned before, the same people that were bears at the lows or too scared to buy (when stocks were actually reasonably priced) are now all raging bulls – a sign of momentum-chasing and FOMO (fear of missing out). But this doesn’t mean the Nasdaq will fall 80% from current levels like it did back then. That’s because big tech actually generates earnings these days as opposed to back in 2000. But from a macro view, that’s irrelevant given that the Fed has only two choices: either crash the economy with higher-than-anticipated rates or let inflation spiral out of control. In either situation, tech stocks will be forced to trade back to their long run average valuations… which means prices need to drop. In other words, “heads you lose, or tails you lose even more.” [Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast]( But as I mentioned before, recognizing a rally built on false premises doesn’t mean you should throw the baby out with the bathwater. I always try to find something I believe in… something to buy supported by solid fundamentals and a big macro trend. That’s why [on July 22]( I recommended investors go long on one of the fastest developing trends in the (now globalized) natural gas market by buying Cheniere Energy (LNG). Since then, LNG is up 25% in less than a month. When stocks detract from reality – as they do both to the upside like now, or to the downside when there’s max fear – it pays to force yourself to even out your convictions by finding something of value on the other side of the trade. And LNG is in a sector that’ll continue to rise at an increasing rate, even in the face of a selloff in broader markets. It’s a great hedge for when you’re so bearish… it hurts. Regards, Eric Shamilov Analyst, Market Minute Reader Mailbag What sectors do you invest in when the market is bearish? Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com. In Case You Missed It… [The 3-Stock Retirement Blueprint]( When most folks think about making money through the markets, they think “buy and hold.” They think “diversification.” And they think about investing in things like index funds. But one man has a different approach… It’s called the “3-Stock Retirement Blueprint.” It’s a way to play 3 stocks – yes, just 3 – and potentially make more money than you would by trading all the rest of them… Or by using an old-fashioned approach. Sound impossible? [Get all the details here]( – including the names and tickers of the three stocks. [Click here now.]( [image]( [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Jeff Clark Trader welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. 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