Sjuggerud: Stop your worrying, this isn’t what a top feels like…

From Dr. Steve Sjuggerud, Editor, True Wealth:

That’s all it took?

A couple of bad days in the market – after a long stretch of calm – and you think it’s all over?

So you skinned your knee (so to speak). Big deal. We all have. It’s part of playing the game.

Don’t throw in the towel… Instead, get back out on the field. You have a lot more points to put on the scoreboard before the game is over.

All right, enough with the bad sports clichés…

You get my point. I hope you take my message to heart.

YOU KNOW WHAT A TOP FEELS LIKE. You went through one in the real estate boom in 2006-2008…

At the top in real estate…

  • EVERYONE was optimistic about house prices. Nobody was cautious. No one even thought that there was even any downside risk. (People felt that way about dot-com stocks in 1999, too.)           
  • EVERYONE was “in” – and heck, if you weren’t “in,” you wanted in!
  • EVERYONE was talking about real estate at cocktail parties, sharing their “can’t lose” strategies.

Everyone thought they had their own spin on it… They thought they had their own unique way of making money that was somehow special to them.

They didn’t realize that, whether they were “flipping” houses or “developing” houses, all the strategies were essentially the same – in that they all relied on higher and higher asset prices to succeed.

THAT is what a top looks like. THAT is what a top feels like.

You might say, “Steve, but that was house prices. This is stock prices.” If that’s your argument, you’re fooling yourself…

Investors had the exact same (delusional!) feelings about tech stocks in 1999 that they had about house prices in 2006-2008.

Look, you KNOW what a top feels like – so let me ask you, does this feel like a top in stock prices?

Is everyone optimistic about stock prices? Is everyone “in”? Is everyone talking about their “can’t lose” stock strategies at cocktail parties?

If you can’t answer yes, then this is not a top. This is not a moment like the one we had with tech stocks in 1999, or real estate in 2006-2008.

It’s not.

This is not what a top looks like. Don’t try to convince yourself otherwise. And invest accordingly…

Good investing,

Steve

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