When most people hear the sirens of the bear market they run for cover in cash. But is that the smartest idea when inflation is over 8% and your cash accounts still pay virtually nothing? (That was a rhetorical question). Gladly there is a better way to carve out profits as the stock market (SPY) heads lower and lower. 40 year investment veteran Steve Reitmeister shares that with you and more in his newest commentary below….
(Please enjoy this updated version of my weekly commentary from the Reitmeister Total Return newsletter).
You know that I am bearish right now. And you know the reasons why as they have been stated over and over again in the ongoing my most recent commentaries.
My solution to tame the bear market is a combination of 3 inverse stock ETFs and 3 shorting bond ETFs to make money as the market heads lower.
In fact, in June alone the S&P 500 is down -11.07% while our strategy has produced a +5.04% gain. So clearly this strategy is working.
Right now you don’t need more evidence to support this outlook and investment strategy. Instead what we need to do is to eradicate 2 flawed bear market myths from your minds as they actually harm investors.
Bear Market Myth #1: Hide Out in Cash
For those bold enough to recognize the bear and take action…most of them believe their only alternative is going to cash. Yes, cash is better than getting run over by the average bear market train taking an average 34% bite out of stock portfolios (and sometimes as much as 50%).
However, this is missing the point that if the market is going down, the best way to make money is shorting the stock market. Meaning why just survive the bear market when you could thrive by generating ample gains?
Let me go one step further. Right now inflation is north of 8%. And your bank account is probably paying 1% or less. So right now going to cash is INSURING a hefty loss because of rampant inflation.
Bear Market Myth #2 Right After This…
Your eyes do not deceive you. This commentary is coming out a day early because Tuesday is a jammed packed day for me as I present my “2nd Half of 2022 Stock Market Outlook” at the Financial Answers Wealth Summit.
Yes, I will talk more about my bearish perspective…how much lower I expect stocks to go… game plan to short our way to profits as well as when its time to bottom fish.
Joining me at the Summit are other investing experts like Gary Kaminsky, David Faber, Adam Mesh and many others sharing their best insights to stay one step ahead of this crazy 2022 market. Gladly you can claim your free spot now…just click the link below to attend this vital investor event on Tuesday 6/21 and Wednesday 6/22:
Back to the article…
Bear Market Myth #2: You Can’t Time the Market
There is some truth to this. It is hard to predict what will happen tomorrow…or next week…or next month. But when you pull back to the big picture it becomes quite easy to be aligned with the long term market trend.
Meaning that when you are in an extended bull market…then don’t sweat every little pullback and correction. Just stay bullish with a collection of healthy stocks with attractive valuations (the POWR Ratings are your best friend in this regard). Doing this will have you on the right side of the action the vast majority of the time.
A bear market is really no different…just the inverse. When the long term trend has skewed negative, as it clearly has this year, then you need to sell stocks short to make money. The easiest way to do that is via inverse ETFs (shorting individual stocks is just too much hassle).
This fallacy about timing the market arose from the money management community as a marketing ploy to stop you from moving your money out of their funds. Because when you do that…they stop making money on your account.
Yes, even as you lose 30-50% of your stock value in the bear market they want you to sit tight. And yes, they will still proudly take their 1% fee on your money for the benefit of their not so stellar advice.
Long story short, perfectly timing the market is not in the cards. But when you appreciate the primary long term trend you can easily align your portfolio to be on the right side of the market action.
Adding it altogether you now better understand our portfolio structure with 3 inverse stock ETFs and 3 ETFs to short the bond market. This is the right strategy now as there is a lot more downside to go on this bear market.
At some point, when things look the bleakest for the market, is when we will start taking profits on these positions and start bottom fishing for the next bull market.
Just like Winter…bear markets don’t last forever either. So you have to be prepared for that change of season and employ the strategies that work best in that environment.
Here too timing will NOT be perfect. But we can be effective enough to ensure that we pocket ample amounts of our bear market gains. And then align ourselves with the new bull market that will emerge.
It’s hard to picture it now in the face of all this downside devastation. Yet with over 40 years of investing experience I have seen my share of these cycles and will help keep us on the right side of the market action.
What To Do Next?
Right now there are 6 positions in my hand picked portfolio that will not only protect you from a forthcoming bear market, but also lead to ample gains as stocks head lower.
Like the +5.04% gain so far in June as the market tumbled into bear market territory.
This strategy perfectly fits the mission of my Reitmeister Total Return service. That being to provide positive returns…even in the face of a roaring bear market.
Come discover what my 40 years of investing experience can do you for you.
Plus get access to my full portfolio of 6 timely trades to not just survive…but thrive in this brutal bear market environment.
Wishing you a world of investment success!
Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, Stock News Network and Editor, Reitmeister Total Return
SPY shares were unchanged in after-hours trading Monday. Year-to-date, SPY has declined -22.73%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan’s is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
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