American Consequences - August 2020

That’s all you need to know. I urge you to take advantage of it. Things are happening quickly. After a lumbering decade- plus-long bull market, the landscape has changed. Everything has sped up. Don’t waffle in your decision and miss out. WHEN TO GET BACK IN When do you get back in after getting out? This is the most important question to answer today – after we just experienced the fastest bear market in our investing lifetimes. In 1996, Porter and I tried to figure it out. We read everything we could on the topic... In particular, we focused on what the most successful traders and investors did with their money over the past 100 years. Long story short, we realized that getting back in had two components: 1. A mathematical one, and 2. An emotional one. We learned a lot about what the best investors have done throughout history. And we

wanted to devise incredibly “dumb” rules for getting back into an investment – rules so simple that it would be obvious if one of us was trying to break them. Porter is the more emotional of the two of us – which is good. He gets extremely passionate about his ideas. And he’s usually right. But sometimes, the markets go against us. So when do we get out? And when do we allow ourselves to get back in? We already had our “sell” rules in place for the first question. We were already using trailing stops to limit our downside risk – even back in 1996. But once we stopped out of something Porter believed in, he wanted to get back in as soon as we could... because he had the conviction that it would succeed. We had to set “buy” guidelines to prevent us from emotionally jumping back into what ultimately might be a bad idea. So we settled on two foolproof rules back then: 1.If the stock or investment hits a new high , then you are allowed to get back in.

PUBLISHER’S NOTE: The “Melt Up” is Dr. Steve Sjuggerud’s term for the final push just before the big “Melt Down.” It’s where stocks often have their biggest, most explosive gains. We started featuring the Melt Up thesis in our inaugural American Consequences magazine in July 2017 in an article titled, “Your Last Bull Market.” Since then the market has soared more than 30%. And many big-name stocks are up far more – for example, market darling Amazon has soared nearly 200%. Time and time again in the pages of our magazine, Steve has written us articles showing how the long bull market would not reach its ultimate peak until individual investors were “all in” on stocks once again. And today, given the COVID-19 crash and the huge levels of fear in the market, he has an important update on his prediction.


August 2020

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