4 Steps to Profit from this Market Panic - Dylan Jovine

Writing About the Stock Market & Life Since 2003


4 Steps to Profit from this Market Panic

“Not as bad as 2008 or 1987.” 

That’s what Warren Buffett said when asked about the stock market rout this week. 

And you know what? I agree with him. My goal today is to help you see that too. 

How? By giving you the 4 step plan you need to take right now to turn this into the biggest opportunity of your life.  These are the exact steps I took to turn the 2008-2009 financial crisis into the biggest payday of my life. 

1. You Can’t Profit from a Market Panic if You’re Panicking Too. It’s that simple. You have to be able to see past the crowd of hysterical people running around screaming. 

Because if we put all investors onto one football field, that’s what it would look like.  Everyone would be running around, as if their hair was on fire, screaming “SELL, SELL, SELL.” That’s where we are right now at this very moment in time. 

So how do you stop the anxiety that comes across every time you watch the news? 

It helps to break the world into two columns (1) things that are NOT in my control and (2) things I can control. I’ve learned that I can’t control anything beyond the tips of my fingers. In other words, everything beyond the tips of my fingers is beyond my control. 

  • Schools are shutting down? Outside of my control.
  • The NBA is going to temporarily suspend their season? Outside of my control. 
  • Tom Hanks and his wife have the coronavirus? Outside of my control.

My point is that if I want to make serious money from a panic, I can’t spend valuable energy worrying about things that are clearly outside my control. Let other people spend the entire day freaking out. I can’t let the anxiety cloud my judgment. I have to stay laser focused. 

(I like to picture myself standing on the sidelines of the football field while everyone else runs around the field in panic). 

2. Sit Down and Write a Shopping List – of Stocks

For years, you’ve watched from the sidelines as certain stocks kept going higher and higher and higher. And people kept getting richer and richer and richer. 

Facebook, Amazon, Google, Microsoft, Apple, etc… Folks who got in early made a fortune. But you missed out. By the time you realized you should own them, it was too late. Not anymore

The great thing about market panics is that you get a chance to buy all those stocks again! It’s like getting a mulligan in golf. A do-over. 

One stock on my list during the 2008-09 financial panic was Starbucks. Ever since the 1990’s, I’d watch them open more and more stores around the country. All the while, I watched the stock go from the $20’s to the $50’s to as high as $100 a share. 

But I never owned a share. The stock was always too expensive for me. And I also knew that the stock market would give me an opportunity to buy that stock cheap one day. I knew that if I was patient enough, one day that stock would come into my price range.

When the stock collapsed $20 a share I started to buy. I bought shares all the way down to $13 ¾. The stock traded as high as $100 a share recently.

My point is this: think of it like a grocery store where everything is being marked “HALF OFF.” That should get you excited.

3. Sell Whatever Stock is Keeping You Up at Night

Remember, the only way to make money from a market panic is to not panic. That’s what step one was about. And the best way to do that is to lower your anxiety. To keep your cool. 

And one of the first lessons I learned on Wall Street was this –  if you have a stock that is keeping you up at night, sell some or all of it. 

For example, let’s say you own 1,000 shares of a stock that’s keeping you up at night. How many shares would you have to sell to be able to get a good night’s sleep? 300 shares? 500 shares? All of it? Only you know what that number is. 

And here’s what you have to ask yourself: is the stock you own that’s keeping you up at night as good as one of the stocks on your shopping list?

If the answer is yes, keep the stock. If the answer is no, sell the stock. If the answer is somewhere in the middle, sell half. That’s how I see it. The goal here isn’t to be a hero. It’s to make money.  

4. Get Ready to Pounce

Let’s move away from fear and back to reality. And that starts by taking a cold, hard look at the facts:

  • FACT: the market is roughly where it was a year ago at the start of 2019. Let’s not forget that. 
  • FACT: It took China and South Korea about a month to get to the other side of this thing. But now things are starting to get back to normal.  
  •  FACT: When we get to the other side of this, the market will likely have a “SNAP-BACK” rally because prices and interest rates are so cheap. 

Until then, follow these instructions and turn this into the greatest opportunity since the financial crisis.

“The Buck Stops Here,”

Dylan Jovine

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