How to Protect Yourself in This Market

Dear Reader,

It’s officially tax season, and as I was looking through my brokerage statements from the year gone by, it reminded me of just how crazy last year was.

We still had Covid raging… and it's not completely gone yet.

Geopolitical uncertainty…

A market correction…

Everything was down…

Then it finally happened…

The bear market.

To oversimplify, a lot of people lost a lot of money.

Finding a good stock was like grasping at straws.

Even crypto went down the drain, which means more people with riskier positions lost even more.

Hopefully, we all made it out in one piece.

I think I selectively chose to forget about the series of events that led to such an abysmal year…

But it’s important to remember what happened so we can prepare for the future and protect ourselves in this market.

As investors, we must always be looking out for the following three culprits: black swan events, irrational investor behavior, and inflation.

Black swans can come in many shapes and forms.

Lately, it seems like we're getting attacked on all sides by the giant bird.

Looking back, the market fell for many reasons.

First, the Russian invasion of Ukraine.

This single event created more uncertainty around the world.

Geopolitical instability is not going to help anyone, let alone investors on Wall Street.

Because we all know Wall Street hates uncertainty.

Then the earnings reports starting piling up…

And they didn't look good.

In April, many of the biggest tech firms dropped.

Tesla fell 30%…

Amazon fell 27%…

And Apple dropped 15%.

Then it all came to a screeching halt when the Dow dropped nearly 3,000 points in September.

It was pandemonium.

It really was.

So to recap, we had Covid…

Followed by supply chain disruptions…

And finally inflation set in.

It peaked at a searing 9.1%.

Everyone was feeling the pain.

Grocery prices, gas prices, you name it.

Thankfully by the end of the year, inflation started to cool off.

So here's what we know: We need to watch out for black swan events.

And we got one this year with the bank failures.

It wasn't that long ago when the last bank failure occurred.

It was just 14 years ago during the Great Recession.

Thankfully, these failures haven't been catastrophic… 

Yet.

Look, the Fed has certainly cooled the economy.

And we've learned that the old saying is true: Don't fight the Fed.

So where do investors turn in this market?

We still have risks, but that's a given.

You can never invest without risk.

But let's get one thing out in the open…

Right now, the word on the street is easy to hear.

Everyone's hoping that the Fed pauses rates.

A reversal would be nice, but we probably won't see that too soon.

Right now the Fed's focused solely on inflation.

Rumor has it that the Fed will raise rates just one more time this year before pausing to assess economic conditions.

But how can we be sure that the Fed will follow through on its word?

Well, we've got to follow the numbers.

We know the Fed's keeping a close watch on the consumer price index (CPI), which excludes volatile food and energy prices.

So that's a good place to start.

If the CPI readout next month is lower that projections, we could see a serious market reversal.

That's the hope, anyway.

In the meantime, food and energy stocks are in play.

You may want to look to fertilizer and energy companies that may even pay dividends to sweeten the deal.

And if you're feeling risky, Bitcoin is definitely something to consider.

It's done exceedingly well this year…

Just keep in mind that it swings wildly, and it's hard to hang on.

Look, no matter how painful 2022 was, at the end of the day, we must put the last year into perspective.

Last year's bear market occurred after the indexes had reached all-time highs in 2021.

It was only a matter of time until something broke.

We are investing in the aftermath of the great 40-year bull run brought on by cheap debt and speculation, afterall.

We can't forget that with every great crisis comes an opportunity, one that will mint fortunes if you know the critical moment the market will pivot in your favor.

So, all eyes are on the Fed.

Once the Fed cuts rates, we could see investors plowing headfirst into this market.

Who knows?

It could spark the next great bull market.

Tune back in next time to Wealth Daily, and we'll keep you informed of the next market-moving events.

Don't forget, we’re keeping an eye on the next CPI data scheduled to be released on April 12.

That will give us a good idea of the direction we're headed.

Stay frosty,

Alexander Boulden
Editor, Wealth Daily

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After Alexander’s passion for economics and investing drew him to one of the largest financial publishers in the world, where he rubbed elbows with former Chicago Board Options Exchange floor traders, Wall Street hedge fund managers, and International Monetary Fund analysts, he decided to take up the pen and guide others through this new age of investing.

Alexander is the investment director of Insider Stakeout — a weekly investment advisory service dedicated to tracking the smartest money on the planet so that his readers can achieve life-altering, market-beating returns. He also serves at the managing editor for R.I.C.H. Report, a comprehensive service that uses the highest-quality investment research and strategies that guides its members in growing their wealth on top of preserving it.

Check out his editor’s page here.

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