Two Mind Tricks for Keeping Control in This Market
The Weekend Edition is pulled from the daily Stansberry Digest.
What happens next in the Middle East remains unpredictable, as does the market in general...
We don't know how long the upheaval will last. So, as investors, how do we respond?
Here's one idea to consider: "Control what you can control."
I first heard this line from a sports psychologist about 20 years ago. The idea applies to playing sports at any level, investing, and just about anything else.
Yes, a lot of things are out of our control – like wars or inflation – but we can put ourselves in good (or bad) positions to succeed (or fail) and live with it.
For example, if you're concerned about more downside ahead in the stock market, you can take profits on a position or two – if there's a good reason.
We often talk about how important it is to know why you're buying. That's because if the thesis behind your original investment is no longer valid, selling might be a good idea.
Our colleague Dr. David "Doc" Eifrig recently did just that in his Retirement Millionaire newsletter...
Four months ago, Doc and his team saw an opportunity...
As Doc recalled in his free Health & Wealth Bulletin on March 18, his team was looking for a way to "profit from the reshoring boom that's bringing manufacturing capability back to America."
They settled on aluminum.
The U.S. produces very little aluminum. But access to this resource is crucial to turn the U.S. back into a manufacturing power. Aluminum is essential for the automotive and electronics industries, as well as national defense production.
Plus, the White House had given the U.S. aluminum industry a big edge. Domestic production is shielded from the tariffs that plague its foreign competitors.
Considering all of this, Doc and his team made a bet on higher aluminum prices in the months and years to come via America's largest aluminum producer, Century Aluminum (CENX).
They didn't have to wait years, though, for prices to rise...
Aluminum prices in the U.S. recently reached multiyear highs. And Century's stock doubled.
Doc and his team weighed whether they should lock in their gains... or ride the stock higher. In the end, they decided to book a quick 107% winner in just four months. Here's how Doc explained the decision in the Health & Wealth Bulletin...
We decided to sell because the aluminum tariffs are now in question. And if they're removed or rolled back, that would hurt Century. We also saw insiders at the company selling their shares on the move higher, signaling that the rally might be topping out...
Any stock that shoots up that fast has the potential to come crashing down in no time at all. Even with a tight stop loss, a sell-off could've wiped out most of our gains before we had time to react.
So while we may have left some profits on the table, that's a trade-off we were willing to make. Protecting our triple-digit gain and our peace of mind took priority.
If we look back in a year and see we didn't nail the peak, that's OK. No investor has a crystal ball and can time the market perfectly.
All you can do is make the best decisions for your portfolio in the moment using the information you have. And if that means taking profits, so be it.
In other words, control what you can control. Sometimes, that can mean taking profits.
But there's another way to harness control in the current market...
Buy stocks when no one else wants to...
This psychological trick will help you ultimately survive and profit from a market correction when everyone else is scared. But you must do it strategically.
To do that, decide what size of a dip you're willing to buy. Then, commit in advance to buying it.
Some people call these "stink bids." Doc likes the term "fishhook trades."
You could also say "set it and forget it."
Here's what to do...
1. Pick one (or more) of your favorite stocks.
Blue chips you want to own forever don't often trade at a discount. Maybe it's a company like Microsoft (MSFT) or Hershey (HSY). These are longtime Stansberry Research favorites.
Or maybe it's another stock that one of our editors has recommended in the past but has been stubbornly above its buy-up-to price.
2. Choose your "stink bid" price.
Once you've identified the stock(s), come up with a price that's ridiculously lower than where it trades today – like 20% or 30% below current levels.
This is the "stink" in stink bid. As an example, consider Hershey, which trades around $215 today. Your price might be $170 (about 20% lower) or even less.
Now you have a predetermined low price at which you'd be happy to buy shares.
3. Set it...
Once you've picked a stock and your stink bid, go to your brokerage account and create a good 'til canceled ("GTC") buy limit order on the stock using the price you chose in the previous step.
The buy "limit" order means your brokerage won't execute the trade until the stock hits the price that you chose. "Good 'til canceled" is exactly what it sounds like... The instructions will remain in place until you cancel them. (One important note: Make sure you have enough cash in your account to cover the total cost.)
4. Forget it.
Move on with your life. Forget about how the war in Iran or whatever else will affect the market.
If the stock ever hits the price you entered, one day your broker will let you know that you scored shares of Hershey (or the company you wanted) at a huge discount.
You'll have taken advantage of a major market sell-off without needing to time it exactly. You won't be battling your emotions or biases.
On the day your stink bid triggers, everyone else will likely be panicking about stocks and their portfolios...
Meanwhile, you'll automatically be following Warren Buffett's advice about being "greedy when others are fearful." If you've put in this limit order on a high-quality, cash-gushing business that sells in-demand products or services, your "greed" should pay off in the long run.
The market tends to reward these businesses over time.
How to Prepare for the 'Bear Market Window'
Finally, don't miss Marc Chaikin's new presentation...
Chaikin Analytics founder and 50-plus-year investing veteran Marc Chaikin just debuted a new presentation that you won't want to miss.
Many of you are likely familiar with Marc... He founded our corporate affiliate in the aftermath of the great financial crisis, so he could use his decades of Wall Street experience to help everyday investors.
In recent years, Marc also predicted the 2020 crash... the 2022 bear market... and the 2023 "run on the banks." And he showed his subscribers how to be positioned in the right sectors to deliver returns and avoid painful losses.
Now, he says the market is fast approaching a "bear market window" that could usher in big potential losses for unprepared investors.
Marc went on-camera this past week with the details about what he sees coming. He also shared his No. 1 move to not only help you protect your wealth, but also potentially lock in double-digit gains over the next 90 days.
If you missed it, make sure you watch his briefing now. In the first five minutes, he revealed the exact date you should move your money to stay ahead of what's coming... Plus, he gave away two free recommendations you can act on immediately.
All the best,
Corey McLaughlin
Editor's note: According to Marc Chaikin, your success during this confusing market hinges on the actions you take today... So if you want to position yourself for multiple potential short-term winners – while shielding your portfolio from catastrophic losses – be sure to check out Marc's recent message. In it, he explains the strategy that could help you potentially lock in double-digit gains in the next 90 days.