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How To Survive In Market Crashes

As of this writing, the PSEi is now down at 6,284 points. If you’ll ask me how my portfolio is doing, I’m now at a 23.85% loss.

If you’ll ask me how I feel, I feel excited.

Excited because I can now buy some of the expensive stocks that I wasn’t able to buy last year. Also, I can now buy deeper to lower my average cost per shares.

Actually, before the crash began, I’m bullish on the market this 2016. But it didn’t turn out what I’m expecting.

The question that’s keep circling in my mind is this; could we predict this sudden market crash months before it happened?

Well actually in my opinion, yes.

But if you’ll ask me if its possible for the exact time frame on when will it happen, the answer is no. If you tried to research about the global financial markets last 2015, you’ll find a lot of warnings about China’s stock market bubble so a crash is really heading our way but no one actually predicted when will it burst. It just popped on June 12, 2015.

Surprisingly, Buffett is still bullish on Chinese stocks even though the plunge is currently happening. (source: here).

The worst drop happened last January 4, 2016. Chinese stocks took a huge dive and it seems that it is the root cause why the global markets followed.

I know there’s a lot of danger out there today, but did you know that some of the greatest investors out there made their huge fortunes during times like these?

J. Paul Getty shrewdly invested his resources on oil during the Great Depression while John Paulson used credit default swaps to effectively bet against the U.S. subprime mortgage lending market.

The good thing is that today’s market is now offering you the potential to make millions in the future just like what these guys did. As J. Paul Getty did, investing in oil has become extremely popular amongst people who are looking for a long-term investment with the potential to give themselves a passive income for the foreseeable future. Oil investments are more common these days, as people try to replicate the success that Getty saw after his investment during the Great Depression.

Look at what Warren Buffet is doing these past few days. He’s been buying Philips 66 (NYSE:PSX) and shows a growing interest in the company. He told CNBC that “We’re buying it because we like the company and we like the management very much.” (source: here, here)

Yet he does this even though his losing a lot from paper.

Buffett was on pace to lose over $2.3 billion from his top five holdings alone: Wells Fargo, Kraft Heinz, Coca-Cola, IBM and American Express, according to FactSet. (source: here)

If you’re a keen follower of Buffett’s investing strategies, then you probably know by now that his strategy is very effective at times such as these.

It is during these times you’ll hear his famous quote,

“Be fearful when others are greedy and be greedy when others are fearful.”

Simply put, Buffett is now being greedy because everyone is fearful.

To Survive In Market Crashes, You Have To:

• Be greedy when others are fearful.
• Follow a simple and proven investing plan that works at times such as these.

We all know that many investors are now scared of the dangers that lies ahead. Many are searching for stock advice anywhere where they may find.

People search on Facebook groups, investing communities and other more experienced investors themselves. Just be careful when taking advice from other people. The stock market is so volatile today that the advice you get today may not be applicable tomorrow.

Buffett always says that if you plan on holding a stock for the long-term, it doesn’t matter what happens along the way. Whether the stock rises or plunges within a year or so, it doesn’t matter.

What investors should think about is that the market will eventually realize its true value in the years to come. When you play with volatility, it will bite you in the end.

Remember John Paulson I mentioned a while ago? While he netted $5 Billion dollars on 2010 during the subprime mortgage crisis which made him a financial legend, his bet on Bank Of America made him one of the worst performing hedge fund managers of 2011. (source: here)

The lesson here is that betting on volatile markets on the short-term is a win or lose game.

So to be safe, this leaves us to the very basic stock advice that we always hear; holding stocks for the long-term is still one of the proven ways to build wealth for investors.

The markets are proven to average at 10% for the past 25 years. While terrified investors are going for the exit doors, we should be heading at the entrance to take advantage of the buying opportunities but sadly, most investors are afraid to make these kind of decisions.

When looking for buying opportunities, you may want to find it yourself if you’re confident enough to do your own stock valuations but if not, Truly Rich Club’s long-term picks are proven to maximize returns just like that.

The nice thing about TRC’s stock picks is that they are generally poised for the long-term investors.

You may also want to check on PinoyInvestors’s special report on the top 10 stock picks in 2016 below.

LINK: (Exclusive!) Special Report: Top 10 Stock Picks in 2016

Final Thoughts

It takes a lot of courage to invest in stocks during these volatile times. If you choose to let the fears subside, you might be losing on huge gains in the future.

When fear strikes me, I always think of Warren Buffett and all the principles I learned from him. The secret is being confident in all of the investing decisions you do and always have a strategy when things go south.

Also, it is equally important to consider other investments such as bonds and other investments alongside your stock holdings to have the least amount of risk during these scary times.

Happy investing!