American Consequences - March 2021


Look, here are the basics: An investment “bubble” has just kicked in recently. And it will certainly end. Unfortunately, most folks who just started dabbling in the markets this year will lose money. A good portion of them will lose a lot of money. Here’s how it will go: • New investors will make a good amount of money on the way up. They will gain confidence. • With that confidence, they will add even more money to their accounts, as they will believe they know how to succeed. • Then the market will turn against them... and they will start to lose money. • At first, they will see it as a golden opportunity to invest even more money, as things are “on sale.” • Ultimately, they will lose even more money on the way down than they made on the way up. It will take tremendous personal and emotional strength to avoid that path... to not end up like everyone else. Your instincts will tell you to buy more. But your instincts will be wrong. In fact, you will need to do the opposite – you will need to sell, just when you feel like you want to buy. Importantly, you will need a plan – set in advance – for how you will get out with most of your gains still intact. If you don’t have that plan in advance, then you will sink with the ship. And even then, having the plan doesn’t guarantee that you will follow it.

Now, before you get bent out of shape with me for urging caution at the precise moment when things seem like they’re getting really good, please keep this in mind: I have been bullish – and right – on the stock market for nearly all of the last 12 years. As investing guru Meb Faber has said, “Nobody has been more bullish and more right about the U.S. stock market since March 2009 than Steve Sjuggerud.” I am proud of that. That’s why it pains me to tell you that the last 12 years of (mostly) good times for investors will likely end this year. (Nobody can know the future of course, but that is my prediction.) For the majority of investors today, how you handle the Melt Down could be the most important event of your financial life... I don’t want to see that happen. But my years of experience tell me it’s coming – and I want you to be ready. For the majority of investors today, how you handle the Melt Down could be the most important event of your financial life... For example, if you are 55 years old and you play the Melt Down the wrong way, you might lose half of the money you have invested. That might cause you to work an additional 10 years before retirement... All because of a few bad decisions made in 2021. So... don’t be that guy.


March 2021

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