Doc’s note: Is it time to panic? That’s what investors are wondering right now.
Today, my good friend and colleague Steve Sjuggerud is here to explain why you shouldn’t worry… and what to look for when it’s really time to panic.
And if you want to know how to make the most of your money in the final stages of the bull market, click here.
You are not going to like what I’m going to ask you to do today…
My friend, you need to be prepared to experience five separate corrections in the final 12 months of the “Melt Up.”
Let me explain why…
Last month, our inbox filled with panicked e-mails…
In a little more than a week (from October 3 to October 11), the major stock indexes fell nearly 7%. The tech-heavy Nasdaq Composite Index fell even more – nearly 9%.
Investors were scared.
I get it. Moves like this don’t happen all the time.
Or do they?
Actually, they do – even in the final 12 months of a stock market Melt Up.
You don’t need to look any further than the last great Melt Up in stocks to see exactly what I mean…
A fall of 10% or more is the official definition of a stock market correction. And in the last 12 months of the dot-com boom, the Nasdaq fell by roughly 10% or more – five separate times.
The chart below shows what I’m talking about…
As you can see, these falls happened quickly – just like we saw last week.
They all happened in a month or less. But they were still painful – even deeper declines than the move we saw last week.
As I mentioned, some of you have heard this from me before. I’m sharing it again because it bears repeating today: Once investors get used to a one-way market, they forget that stocks go down as well as up.
If you were invested back in the late 1990s, all five of these moves would have made you question whether staying long stocks was the right choice.
But today, nobody remembers any of it.
The way most folks talk about the dot-com boom now, you’d think stocks did nothing but soar the entire time…
The Nasdaq more than doubled during the final 12 months of that boom. That’s the part everyone remembers.
So I don’t want you to get scared out of the market today… and miss out on potentially life-changing gains.
The reality is, corrections are normal. And if today’s Melt Up plays out anything like last time, we could see as many as five corrections worse than what we just went through before the good times are over.
So yes, it has been a terrible couple of days… And no, you don’t have to like it.
But a pullback in stocks does not signal the end of the Melt Up. I strongly believe the biggest gains are still to come.