Contrary to popular belief, investing is not about how to buy and hold. It is about buying assets when they are mired in a bear market, and selling them once they are at the height of the ensuing bull market.

The challenge for every investor is to smile when he buys a stock while his friends tell him what a fool he is for buying, and to smile even wider when he sells the stock and his workmates tell him how crazy he is for selling.

Successful investing is one of the hardest things a person can do!

Today, the American equities markets are in a trading range. Despite all the talk about improving conditions, the economy has embarked on a new normal of slower growth. Credit spreads have narrowed, but they are not leading to increased lending from banks. The financial system is still on life support. As long as the dollar remains the reserve currency of the world, the Fed can fix everything the same way they have done for 20 years -- by printing enough money to inflate a recovery. Unfortunately, the dollar index is at multi year lows and it is falling fast. As China initiates non-dollar currency swaps, oil producers consider accepting Euros for oil, and international real estate transactions across the world are no longer taking place in dollars, it will become that much harder for the Fed to be effective. Even after the tremendous bounce we saw in 2009, the stock market recovery needs to be approached with a safe skepticism.

The great bull market began in 1982, it ended in 2007. According to classic Dow Theory, bear markets tend to last a third to a half of the duration of their previous bull market. That would be around 8 to 12 years until we hit bottom and it becomes a lot easier to pick winners. Sometime between March 2016 and May 2020, we will be able to buy stocks at great values.

YIKES!!!!

This would not be the first time stock markets have gone nowhere for this long. As the economy went through the trials and tribulations of the 70s, the markets never broke out of the highs they made in the previous decade. On January 28, 1966 the Dow Jones closed at 990.36. Almost 17 years later, on December 16, 1982, the Dow Jones closed at 990.25. From 1929 to 1954 the Dow Jones didn’t move either.

That doesn’t mean there weren’t opportunities. There were plenty bull markets during that era. There was the nifty fifty blue chips of the 60s and 70s, gold went up over 1500%, and in 1974 stocks traded at a bear market bottom, offering investors super-rich values and dividend yields as high as 15%.

If you bought and held in 1929 or 1966, you wouldn’t be pleased with the results. If you bought in 1942 or 1974, that’s another story.

So Dave - what does this mean? Do I collect baseball cards for the next 15 years?

Absolutely not. It’s going to be a lot harder to make money in this market, but it’s not going to be impossible.

Just like the ups and downs of 1966-1982, this decade will have tremendous opportunities to profit. Back then you traded individual stocks. Now we have ETF’s enabling us to buy and sell commodities, currencies, industries, even entire countries!

Imagine what would have happened if you bought gold in 1970 and held it for 10 years? Then, in January of 1980 when gold rose to $850 an ounce and every analyst was telling you how soon it would reach $2,000 – you sold your position and bought stocks. Your friends would call you crazy. Your neighbors would think you’ve lost your mind. Instead of becoming concerned, you would smile wide, confident in the time tested truth of successful investing. We buy LOW and sell HIGH. That’s how you make money and keep it.

Our objective at Real Wealth Recon is to search for those sectors within the market that are undervalued and have potential. Our objective is also to tell you when the ride is over and it’s time to sell. That’s when we find you the next opportunity. We don’t ask for your money and tell you to “trust us.” We provide you the information you need to TRUST YOURSELF!

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