Recession Worries? Here’s What to Do With Your Stocks Now

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If I asked you to name some of the biggest stock market winners of the 21st century, there’s a good chance Amazon (NASDAQ:AMZN) would come to your mind.

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After all, Amazon has gone from a small online book seller to one of the world’s largest, most powerful companies. Amazon now sells virtually everything … and its founder Jeff Bezos is one of the world’s richest men.

As result, Amazon’s shareholders have enjoyed one heck of a ride …

Amazon’s market value has increased more than 86,000% since its IPO in 1997. That kind of gain turns every $10,000 invested into a stunning $8,610,000.

You probably know why Amazon is so successful. Its Prime membership program is a huge hit. Its mastery of logistics has lowered the price of almost everything. Its cloud computing business generates billions of dollars in annual revenue.

What you probably don’t know is what the Dow Jones Industrial Average did on March 4, 2015 … or what the Dow did on October 18, 2013 … or what the Dow did on ANY specific day of Amazon’s incredible 86,000% bull market.

That’s because what the stock market did on those days didn’t amount to a hill of beans compared to what Amazon’s business was doing.

What the market did or what the headlines were on any specific day are meaningless compared to the moves Amazon’s management was making.

What really mattered to Amazon shareholders wasn’t the broad market, interest rates, or political wrangling. What really mattered was that Amazon constantly innovated and beat its competition.

Here’s why this is so important to you as an investor …

If you follow the markets for more than a few days, you’re sure to come across “bearish” news and predictions. Especially now, with stocks slipping into a bear market and the economy headed for a recession as the coronavirus pandemic causes fear around the world.

There’s a whole industry of financial analysts who constantly predict the fall of America, runaway inflation, the next Great Depression, and a host of other calamities.

These folks are born pessimists.

No amount of positive things can shake them from thinking things are about to go to hell in a handbasket soon.

And you know what?

We listen to them.

Humans are hardwired to pay close attention to potential dangers. A hundred thousand years ago, it’s how we survived. Constantly worrying that a tiger or bear could be around the corner was a valuable instinct.

These days, we don’t have much to fear from bears or tigers. However, our instincts make us pay close attention to potential dangers. So, many of us are compelled to click on bearish headlines, buy magazines with gloomy forecasts on their covers, and read bearish financial newsletters.

As financial media insiders like to say, “Fear sells.”

Fear in the market has been near record highs. Fears of the coronavirus, a looming recession, and an unfolding oil price war have rattled the market and the economy. Investors are wondering if they should sell everything, invest more, or simply do nothing.

It’s a critical time in the market, so I encourage you to let common sense and the facts overwhelm your caveman instincts. You’ll be far more successful as an investor if you do.

That’s why I recently launched my Crisis and Opportunity Portfolio. In it were three small-cap stocks recommendations with massive upside potential, and I just added a fourth pick on Wednesday. The first three stocks have done very well since the launch — with one hitting new all time-highs on Thursday — and the fourth will likely do the same as it is in prime position in a key hypergrowth trend for the future.

So, what are the facts?

  • Well, just consider that the stock market has averaged a positive annual return of 7% for the past 100 years.
  • The stock market has gone through a dozen bear markets since 1930. After each and every one of them, stocks have rallied to new highs.
  • Consider that poor people in America get better medical care now than the world’s richest people did just 80 years ago.
  • Homes have never been larger
  • Living standards in the U.S. have never been higher.
  • The average bull market lasts 4.5 years. The average bear market lasts just 11.7 months.

I’ve got one more fact for you …

During the 20th century, stocks appreciated in value 7% each year on average — a total return of 80,995%.

An 80,995% return turns every $1,000 invested into $810,950. Or every $10,000 into $8,109,498.

But wait …

Wasn’t the 20th century filled with wars and recessions and other awful things?

Yes.

There were two huge world wars, which killed tens of millions of people and devastated large portions of the world.

You also had the Great Depression … the Korean War … the Cuban Missile Crisis … the Watergate scandal … the inflation of the 1970s … the Arab oil embargo … the Vietnam War … the 1987 stock crash … and the savings and loan crisis of the 1990s.

You also had more than a dozen recessions and five horrible bear markets.

Despite all these horrible things, U.S. stocks appreciated in value by nearly 81,000% during the 20th century.

Despite something bad happening every decade, incredible wealth was created by innovative businesses like Coca-Cola (NYSE:KO), Ford Motor (NYSE:F), Hershey (NYSE:HSY), Intel (NASDAQ:INTC), Disney (NYSE:DIS), General Electric (NYSE:GE), McDonald’s (NYSE:MCD), Proctor & Gamble (NYSE:PG), Tootsie Roll (NYSE:TR), Pfizer (NYSE:PFE), Microsoft (NASDAQ:MSFT), Walmart (NYSE:WMT), Starbucks (NASDAQ:SBUX), and thousands of others.

We all know there are problems in America … like debt, poverty, and inequality.

These topics are covered daily in the news.

They are the subjects of best-selling books.

They have many people paralyzed by fear.

But if you know your history and know how powerful American innovation is, you know this is not cause to sell your stocks and crawl into a hole.

You know that for every ONE problem in America, there are THOUSANDS of brilliant people working on innovative solutions.

They are developing amazing products and services that will make our lives better.

These are the types of people who invented the light bulb … the television … the pacemaker … the airplane … and the iPhone.

They are the people who have the brains and work ethic to create incredible businesses like Starbucks, Facebook (NASDAQ:FB), Amazon, Whole Foods, Apple (NASDAQ:AAPL), Nike (NYSE:NKE), and Alphabet (NASDAQ:GOOGL).

These companies have provided good jobs to millions of people … they’ve provided goods and services to thankful customers … and they’ve produced hundreds of billions of dollars in wealth for their shareholders. All by creating and innovating.

Even better, these kinds of folks work in America. Despite what some Debbie Downers like to say, the legendary investor Warren Buffett is right: America is still the greatest place in the world to do business.

  • We have deep and liquid capital markets.
  • We have rule of law.
  • We have excellent accounting standards, which creates transparency.
  • We encourage and foster innovation.
  • We respect property rights.
  • We have an excellent transportation network. (If you like to complain about U.S. infrastructure, I urge you to visit a third-world country for comparison)
  • We have a huge population of well-to-do consumers ready to buy great products and services.

The advances made by American entrepreneurs allow today’s average American to live better than a king did 100 years ago.

Even people in America’s “low income” bracket have better medical care, better food, better transportation, and better access to information than anyone did in 1919 — no matter what their level of wealth.

In other words, free markets, innovation, and productive enterprise have allowed mankind to achieve incredible progress despite wars, recessions, and bear markets.

It’s been that way for centuries … and it will continue to be that way in the future.

Below is a chart of the Dow Jones Industrial Average from post-World War II through mid-2019:

Incredible, right?

With this picture in mind, my advice is to “make the trend your friend,” even with something as serious as the coronavirus. Don’t focus on the fear-stoking headline of the hour and get scared out of your holdings of high-quality innovative companies.

Focus on what really mattersInnovation.

We are in a crisis. But this crisis will not stop the technologies of tomorrow from continuing to grow. The introduction of next-generation wireless technology will not be stopped. Progress in artificial intelligence will not slow. Electric vehicles will not stop taking market share. And precision medicine and genomics will not stop making huge strides.

The panic that has taken over has created prices we may never see again — ever. So, it is time to start putting money back into stocks. But the key is parking that cash in the right stocks.

Those right stocks make up my new Crisis and Opportunity Portfolio. We currently have four stocks – one of which we just added Wednesday – and the plan is to strategically add more in the coming weeks to take advantage of fantastic buying opportunities. Click here to learn how you can be among the first to know about these new recommendations.

At this time in the markets and in our world, remember that despite all the negative developments of the past 100 years, shareholders of innovative companies made fortunes.

It’s been the surest way to get rich in America for more than 100 years. It will be that way for at least 100 more. That’s why staying bullish on innovation is at the foundation of what we do in Early Stage Investor.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/moneywire/2020/04/recession-worries-heres-what-to-do-with-your-stocks/.

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