Tales of a Technician: 8 Reasons Why I’m Buying Stocks
September 26, 2022
The S&P 500 just closed at a new low for 2022, down nearly 25% off the highs. Meanwhile, the Nasdaq and Russell 2000 Indexes are down 33% each. And that’s just here in America. Thanks to the rocketing U.S. dollar, foreign equities are plunging as well. European equities are down 33% (EFA) and Emerging Markets are down 40% (EEM).
Oil just fell to a new low and is 41% off the highs. Mortgage rates are on their way to 7% and housing is coming to a screeching halt. Its demise won’t bode well for the economy. The VIX has returned to its high of 2022, bears are everywhere and it seems like the dumbest thing you can do is buy stocks.
I’m buying anyway. Here’s why.
① One: You don’t get very many chances to acquire shares this far off the highs. Indeed it happens no more than once to twice a decade.
② Two: We’re closer to the bottom than the top. The average bear market takes the S&P 500 down around 30%. We’re very nearly there already.
③ Three: As a long-term investor, I’m far more concerned with missing out on the next double than I am suffering through another 10% down. Whatever additional loss arrives over the coming weeks and months will be temporary. The subsequent advance will be permanent.
④ Four: You have two choices when buying in a bear market. Buy on the way down or wait for an uptrend/bottoming pattern and buy on the way up. They both have merit. In putting money to work now, I’m opting for the former.
⑤ Five: Time will bail me out. The market’s forward returns look fantastic (see here) when you’ve purchased this far off the highs.
⑥ Six: I’m investing money I don’t need for over a decade. Should I really care if stocks drop another 10%-20% from here before continuing their long-term advance?
⑦ Seven: It never feels good buying during a bear market. That’s part of the reason why it’s the right move. One of the biggest regrets I have is not putting more money to work during the major bear markets of my career. It’s a mistake I won’t be making again.
⑧ Eight: You don’t have to know how this will end. You just have to know that it will end. The worst-case scenario never arrives. Sooner or later the stock market sniffs out the recession, prices it in, we bottom, and the permanent advance of equities returns. Seeds planted now will bear fruit in the years to come.
Read more Tales of a Technician [FREE Content]
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
