Building Wealth "This time is different."
Does this sound familiar?
It's an infamous quote that's often used in the financial market. For as long as I can remember, it has been used to refer to extremes.
Typically, the phrase is used when stocks are hitting highs and economies are booming. The bulls will proclaim that "this time is different"... and that a bubble isn't forming and stocks won't fall prey to similar situations we've seen in the past.
But we see that on the downside, too. And I (Matt McCall) am starting to hear that notorious phrase being used a lot by market experts and economists when describing the current market environment. Now, the pessimists and bears are proclaiming that this time, everything is different.
The common theme here – both when the market is rallying and when it's falling – is that we're in unprecedented times. But to really understand what that means, we need to take a step back and look at the past.
Let's take a walk back through history...
People got it wrong in early 2008 when they believed that the bull market would never end and that Wall Street knew what it was doing. We all know that naïveté resulted in the great financial crisis.
The specific factors that drove the 2008 to 2009 collapse were different, but everything still revolved around the greed of both Wall Street and individual investors.
The same can be said for economies outside of the U.S., too.
The Japanese crisis of 1991 to 1992 led to a bust in real estate and housing prices. And three decades later, the country is still trying to get those markets back to their previous levels. Once again, the bulls let greed get the best of them.
Anyone who has invested with me for some time knows that I don't subscribe to this theory. Sure, the factors driving stocks down today are not the exact same as those that created past bear markets. But there's always one factor that remains the same...
Human psychology.
Today, we're concerned about inflation, higher interest rates, geopolitical unrest, above-average stock market valuations, and generalized fear over political leadership.
But that's nothing new – the U.S. and other countries have dealt with similar situations before.
Of course, the cause of inflation today is not exactly the same as it was in the 1970s. Back then, the masses didn't have access to the Internet, cellphones, or personal computers, whereas now a constant stream of information is the norm.
So it's a similar situation... but still very different. The important point here is that the human psychology as to why stocks are falling is the same. And it all comes down to fear.
Humans are often driven by either fear or greed. Both can lead to volatile times in the market and in life in general. They're often viewed as extremes and can cause unrest.
But I view this emotional response as an opportunity.
By understanding the large role that human emotions play in the stock market, we have the chance to take advantage of today's high level of fear.
Eventually, this fear will subside, and when it does, we will see an overwhelming amount of "FOMO" – or the fear of missing out. By then, stocks will have already started the rally that I believe will begin in the second half of this year. And anyone who wasn't already invested will be left scrambling to chase the rally.
So... when the bears tell you that "this time is different" and the world has never been in a situation like the one we're seeing today, simply smile and nod your head. Meanwhile, continue to stack your watch list with great companies to buy when the tide inevitably begins to turn.
Opportunity lies in front of you. All you need to do is take it.
I recently discovered that President Joe Biden reinvoked a 1950s law just weeks ago. He did it to get around asking Congress for permission... and committing more than $610 billion to one sector.
This is the start of something truly incredible, for those who know what's coming... and have followed the trail of government spending and investor money, like I have.
Make no mistake, this opportunity has the power to make a lot of people incredibly wealthy.
And today, six companies are perfectly positioned to receive most of the funding coming... with the potential for explosive gains.
Best regards,
Matt McCall