Lately, the stock market has been described as being “as vulnerable as someone after a bad breakup.”

The picture it paints is a vivid one — weepy eyes, empty ice cream containers filling up the garbage can, your ex’s clothes thrown onto the lawn like some melodramatic music video.

But I’m not so sure “vulnerable” is the right word; it dredges up the wrong connotation and the wrong image of how successful investors should react to rocky market conditions.

Instead of mourning what might have been — the rampaging bull market we all long for — we can take time to reassess, reallocate, and reinvigorate our portfolios with strong stocks that are now trading at a discount.

And I don’t mean fad stocks — stocks that are only rising on the heels of some temporary trend. (We all remember the Reddit-driven GameStop (NYSE:GME), Bed Bath & Beyond (NASDAQ:BBBY), and AMC Entertainment Holdings Inc. (NYSE:AMC) cacophony of last year.)

I mean stocks that you hold through good times and bad — especially if they pay a steadily rising dividend — are a critical part of any Intelligent Asset Allocation strategy.

You should think of these investments as your core holdings — your “Forever Stocks.” Treat these Forever Stocks as your “Elite 8” or “Top 10” — or whatever number you decide on.

In my experience, eight to 10 stocks are ideal. In total, these stocks should represent about 25% to 35% of your total portfolio.

These are the stocks you hold through thick and thin unless the rationale for owning them changes significantly or you decide to replace one of them with a different stock.

Buying Great Stocks at the Worst Time

Long-term survival does not rely just on a strong defense; it also requires an effective offense. That’s where Forever Stocks come into play.

Further, if we decide in advance that one small piece of our portfolio remains sacrosanct, we can more easily adjust the rest of our holdings.

In other words, maintaining an Elite 8 is comforting for most investors. That comfort gives them the strength and conviction to exercise caution, when appropriate, with the rest of their portfolios.

Obviously, Forever Stocks will suffer during a severe bear market, just like ordinary stocks. So any investor who holds onto stocks like these during a sell-off is likely to suffer mark-to-market losses.

But these losses are a small price to pay for big long-term gains… assuming the rest of your portfolio is well-positioned.

Investment success cannot depend on clairvoyance. It must rely on the humble admission that the future is unknowable. It must rely on tactics that can succeed in good times — and protect against adversity… no matter when it strikes.

So just like we can never predict exactly when disaster will strike, we can also never predict the precise moment when prosperity will hit.

That’s why we must prepare for both.

Conventional wisdom says that market highs are the worst time to buy stocks. And as I write this, the market is shuddering — despite stocks closing the month higher, Jan. 2022 was the worst month, numerically speaking, since March of 2020.

Which makes today — or any day — a good time to buy them. To do that, let me share something a wise, old man once told me: “There’s no wrong way to say, ‘I love you.'”

Similarly, there’s no wrong way to buy a great stock… a Forever Stock.

That said, timing is important in both love and finance. In finance, buying a great stock near a major peak is less ideal than buying it near a major low. But the investment gains that can accrue from buying an excellent stock at the worst time can be astonishing.

Timing is important, but it’s not everything. That’s my point here.

Consider an example from the past.

Imagine, for instance, that you had purchased shares of Netflix Inc. (NASDAQ:NFLX) at its 2011 peak. You would have watched their investment tumble 80% over the next 12 months. But investors who stayed the course until today are sitting on a plump gain of 725% — or five times better than what the S&P 500 did over the same stretch.

Obviously, I cherry-picked that success story. But many successful investments are made at the “wrong time,” — and yet, they can go on to produce large, market-beating gains.

Bottom line: Great stocks need time to flourish… and to compound their successes.

As I’ve mentioned before, some of the megatrends I identified in 2021 — battery metals and the 5G rollout, specifically — aren’t going away anytime soon.

We’ll keep a close eye on those sectors in the coming months… and perhaps you’ll find your Forever Stocks there.

Eric Fry

P.S. In the past three years alone, more than 120 technology companies have soared by 100% or more. And there’s a secret behind all of this, which very few Americans understand… When you learn this secret, you’ll see why what has happened in recent years is NOTHING compared to what’s coming next. Details here.

On the date of publication, Eric Fry did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.