By Market Outlook — Russia/Ukraine War
Editor’s Note: In light of the geopolitical events taking place today, we’re holding our original Bold Profits Daily to give you an urgent message from Paul and his outlook on today’s market volatility.
While you may not want to hear this today, you must try to have Strong Hands right now. Be bullish, be optimistic, be positive.
I know it’s hard.
By now, you know what’s happening with Russia and Ukraine. So I’m going to stick to how it pertains to your stocks.
In my three-decades-long investing career, through market corrections, crashes, recessions, inflation, interest rate spikes — and yes, even wars — I can tell you that staying IN through these periods is when it absolutely matters the most.
No one was prepared for the COVID pandemic. Yet, it accelerated our America 2.0 mega trends.
I believe we’ll see another takeoff acceleration moment. And we are perfectly positioned for it.
There are a lot of emotions right now. But to make money in the market, you have to take emotion out of the picture.
So please, keep Strong Hands. Watch my market outlook here:
I sent you a longer note earlier today on this. If you missed it, you can read my full analysis here:
First, I want to acknowledge a few things. I know how incredibly hard it is to be the Strong Hands at times like this.
However, I’m still very much bullish, optimistic and positive (#BOP) on our stocks — and although it’s a tough ask, I urge you to try your best to keep the same outlook.
Because throughout the past three decades of my investing career, through market corrections, crashes, recessions, inflation, interest rate spikes — and yes, even wars — I can tell you that staying IN through these periods is when it absolutely matters the most.
I’ll take you back to late 2008. We’re in a recession, an ongoing war and a housing crisis.
A Dutch client came in for a meeting with our hedge fund team. Our portfolios were down and he wanted us to sell and take our losses. He was angry. Irate, even. He was a much bigger guy than I am, and truthfully, I thought he was going to get violent.
You can read my tweet stream for the long version of the story here. But the short of it is that after calming him down and encouraging him to keep Strong Hands, he later saw that our advice to him was right.
However, I can say that our advice to him was right. A few months that same portfolio was well over the point where he wanted us to sell to lock in our losses. A year later, it was at a profit. Another year later, the gains were so large so that the low prices seemed unreal.
— 🇺🇸Paul Mampilly (@MampillyGuru) February 24, 2022
Here’s the truth — what I’m encouraging you to do is the very same strategy I use to make money myself and used in the past to make my clients millions. I know that it’s incredibly difficult. But I tell you to keep Strong Hands and remain #BOP because it works.
And if you sell during the downs, you rob yourself of the potential gains you could have made if you ignored the fear, uncertainty and doubt (FUD) we’re all feeling right now and held on for the recovery.
Because a loss is only realized as a loss if you sell.
And many of you are skeptical, even cynical that we’ll ever make our money back. I can tell you personally that in 2008 and then again in 2016, we saw this kind of volatility. And the gains from the lows were preposterously large. Ridiculously large.
— 🇺🇸Paul Mampilly (@MampillyGuru) February 24, 2022
Truthfully, this is how I made a ton of money in both those periods. I just held on to what I owned and then the recovery started and kept going and going and going and going. Stocks that were once down 50% or more, had gains that were unimaginable.
— 🇺🇸Paul Mampilly (@MampillyGuru) February 24, 2022
As for my outlook on the Russia/Ukraine conflict, the team and I did a little digging into the subject of war and its historical effect on indexes, particularly, the S&P 500 Index.
And according to a study by LPL Financial and as reported by Investopedia, though geopolitical conflicts and wars are very traumatic events, from a financial markets’ perspective, U.S. stocks have historically weathered geopolitical conflicts well over the longer term.
See below:
(Click here to view larger image.)
LPL Financial tracked major market shock events from 1941-2020.
As detailed in the above chart, the S&P 500 Index declined an average of 1.2% on day one of the market shock event.
The S&P 500’s total drawdown (the maximum percentage index drop) over the course of a geopolitical conflict or war was an average of -5%.
The number of calendar days it took for the S&P 500 to hit a bottom during a market shock event was 22 days, while the number of days it needed to recover to levels seen before the shock event occurred was 47 days.
This historical study shows that financial markets are resilient, and that wars and geopolitical conflicts often have “little sustained impact on stock markets or economic growth” stateside.
So while our stocks will experience some short-term pain, this conflict will largely be shrugged off in the market in the long term.
And the long term is important, because that’s exactly why we’re in our stocks for three to five years — to give these growth stocks time to do what we’ve recommended them to do — grow.
Same for our options services, which is why we recommend trades with longer expirations — to give them time to recover through the ebbs and flows of the market.
But it won’t happen overnight. There will be volatility along the way. However, I’m still BOP that in the long term, the upside is on our growth stocks, and they will be largely unaffected by this conflict.
So please, keep Strong Hands.
Regards,
Editor, Profits Unlimited
