How to prepare for a hard-hitting bear market (think 1929-1932): :: InvestMacro

This altimeter is higher than it was at the top of internet mania

by Elliot Wave International

An important step in preparing for a historical bear market is to embrace cash or cash equivalents.

This may seem obvious, but even with the stock market in a downtrend, so is cash shunned By many investors – individuals and professionals. Many of these investors believe that the bull market will resume – sooner rather than later.

as may Elliot Wave Nazera monthly publication analyzing financial markets and major cultural trends, noted:

The percentage of assets allocated to stocks in the portfolios of members of the American Association of Retail Investors remains near the peak of the rally. …they believe that a “correction” is in effect but not a bear market.

Therefore, AAII members had more stock than cash.

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Here in July, investors continue To hold onto the hope of the bull’s return. This graph and comment are from the post just now Elliott wave financial forecast:

This chart shows the percentage of US households in stocks relative to their total assets and provides long-term context. At 27.5%, the last reading, from the end of the first quarter, is above the peak reading of 26.3% at the top of the internet craze in the first quarter of 2000!

professional Market watchers similarly dislike criticism (Bloomberg, July 27):

S&P analysts haven’t been so optimistic in 20 years

The point is: if you have a portfolio of mainly cash (or cash equivalent), you will be in the minority, which history shows is usually the best place when the market goes from bear to bull or bull to carry.

Just make sure to keep your money in the most secure institution.

You see, speaking of history, Elliott Wave International President Robert Prechter wrote this in March Elliot Wave Nazer:

Between 1929 and 1933, 9,000 banks in the United States closed their doors. …before the global depression takes over our daily lives, you will need to deposit your capital in safe institutions.

You might say, “My deposits are insured up to a maximum of $250,000 by the FDIC – why should I worry about the stability of my bank?”

March Elliot Wave Nazer explain Why Should Not It relies on the FDIC and provides a wealth of other insights to protect your financial safety – plus physical safety.

If the bear market turns out to be severe as Elliott Wave International predicts, social and political turmoil is likely to erupt.

Now is the time to learn the important message of the Elliott wave pattern in the stock market.

If you are not familiar with Elliott wave analysis, we encourage you to read Frost & Prechter’s The Elliott Wave Principle: The Key to Market Behavior. Here’s a quote from the Wall Street classic:

The practical objective of any analytical method is to determine the lowest market levels suitable for buying (or covering short positions) and the highest levels of the market suitable for selling (or short selling). When developing a trading or investing system, you must adopt certain patterns of thinking that will help you remain flexible and decisive, defensive and aggressive, depending on the requirements of the situation. Elliott Wave Theory is not such a system, but it is unparalleled as a basis for creating one.

Despite the fact that many analysts do not treat it as such, wave theory is by no means an objective study, or [Charles J.] Collins coined it, “a disciplined form of technical analysis.”

Here’s the good news: You can read the full version of the book online for Free Once you become a Club EWI member.

Club EWI is the world’s largest Elliott Wave education community with nearly 500,000 members worldwide and is free to join. Members enjoy free access to a treasure trove of Elliott Wave resources on investing and trading without any obligations.

benefit? If so, just follow the link and you can have the book on your screen in a few moments: The Elliott Wave Principle: The Key to Market Behavior (Free and unlimited entry).

This article was published by Elliott Wave International and was originally published with the headline How to Prepare for a Heavy-Duty Bear Market (Think 1929-1932). EWI is the world’s largest market forecasting company. Its staff of full-time analysts led by Certified Market Technician Robert Prechter provides 24-hour market analysis to institutions and private investors around the world.

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