Chris’ note: With everything going on right now, it’s easy to be fearful as an investor. We’ve had record inflation… big sell-offs in crypto and tech stocks… and now a ground war in Europe. Russia’s attack on Ukraine has spiked oil prices… and ramped up stock market volatility.
If you’re anything like my friends and family, you have a slew of questions and worries. So today, in addition to your regular issue, I’m sharing with you an insight on how to deal with it all from colleague Teeka Tiwari.
Below, he has a simple secret for staying rational… and staying the course with your investments… in times of crisis. If you learn and internalize this secret, you’ll look at your wealth-building journey completely differently. And you won’t lose sleep when crises like the one unfolding in Ukraine hit the headlines…
Every once in a while, an event shakes the market to its core.
Two years ago, it was the COVID-19 pandemic.
Today, it’s Russia’s invasion of Ukraine.
It’s concerning. No one knows how long it will last and what the effects will be, both in the stock market and globally.
But a lot of news outlets have wasted no time putting this event into extreme terms:
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“Russia invades Ukraine in Europe’s ‘darkest hours’ since WWII” – Reuters
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“Fear of War Grips Europe as Russia Orders Troops Into Ukraine” – TIME
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“Nuclear fears mount as Ukraine crisis deepens” – Politico
I don’t want to downplay what’s happening in Ukraine. It’s absolutely tragic what that part of the world is going through.
But it’s important to remember not to slip into a spiral of gloom and doom in a situation like this. That’s when you become your own worst enemy and sell at the worst possible times.
So today, I want to share with you a simple wealth-building secret that helped me stop being my own worst enemy when outside forces impacted how I saw my investments.
I hope it does the same for you…
Getting wealthy is a strange journey. It’s almost like the universe wants to see if you’re worthy. Because it will keep throwing obstacles in your path to blow up your future wealth.
I did more to sabotage my wealth in the 1990s and 2000s than any external enemy could have done. And I take complete responsibility.
I stay with my readers every step of the way because I’ve been where you are now… scared and unsure of what to do next.
It’s my goal to make sure that five, 10, 15, and 20 years from now, you don’t look back and say, “How did I let myself get scared out of my positions? Why did I lose so much sleep over all those events?”
I want a different life for you. Creating wealth and having the life you want is something everyone deserves. And it’s something everyone can achieve.
It doesn’t matter what your educational background is… what color you are… your religion… or where you grew up.
Anyone can create wealth if they follow a simple set of fundamental rules. When you follow them, wealth will automatically follow you.
One of those rules is: Buy great assets and hold them. That’s it. You don’t have to be a rocket scientist to do that.
I’ve been preaching this approach since 2016. And if you’ve been with me since 2016, it’s changed your life. Because we own great assets.
Now, the market is already on edge and worried about interest rates and the Federal Reserve.
Wall Street projects the Fed will raise interest rates anywhere between six and nine times over the next year. Those estimates mean we’d see rates increase by 150–225 basis points.
Friends, I’m telling you right now that will not happen.
The U.S. federal government is the largest debtor in the world right now. It pays approximately 1.5% in interest on its debt.
Those payments go to over $700 billion a year if interest rates double. That’s almost 20% of the entire federal budget allocation for interest payments.
There’s no way the federal government will allow that to happen.
As it relates to Ukraine… I think this situation actually works in our favor as longer-term investors.
Certainly, in the short term, it’s not pleasant to go through. In fact, it’s downright awful. But think about it…
Will Fed Chair Jerome Powell have the stomach to raise interest rates in the face of global turmoil like we’re seeing in Ukraine? I don’t think so.
I do believe we’ll see a short, sentiment-driven drop in the market because of Russia’s invasion. While there’s no way of knowing the time the weakness will last, history suggests it won’t be long.
In fact, according to BCA Research, the average decline of the S&P 500 after geopolitical conflicts is 10.7%. But on average, one month after these events, the S&P 500 recovers those losses. And one year later, it rises an average of 9.5%.
That’s going all the way back to 1956. So I’m not worried…
The key here is to remember that you own great assets. The second thing to remember is don’t sell them.
And while these assets can take a temporary hit from outside events, don’t confuse short-term chaos with a long-term trend.
If you stay focused on the long-term picture of continuing American growth and technological adoption – you’ll be poised to make a fortune from these assets. That’s it.
If you bought Apple (AAPL) stock in 2007, the only things you had to be right on to make a lot of money was that smartphones were real, and most of the world would eventually own one.
Or look at Microsoft (MSFT)… Its stock got hammered in the 1987 crash.
But all you had to say to make a fortune was, “I think Microsoft will be the go-to software for desktop computers. I don’t know how long it’ll take, but I think everybody will have a desktop computer.”
So if you can stay rational through these periods… and not sell at the bottom during a panic like we’re going through now… the long-term returns will transform your life in a way you can’t even begin to imagine.
Just enjoy your life… let time do the heavy lifting… and know that you have great assets.
Hopefully, some of you have been with me long enough to have seen that transformation.
I know others might think, “Oh, Teeka, that sounds like a lot of hot air.”
I wish we had a way for people who have been with me since 2016 to 2020 – through some truly dark market periods – to share their experiences with you.
They’d tell you, “No, this guy’s actually right. What he’s told me has worked. I’ve bought these assets. I’ve held on to them. Yes, it was very scary in 2018 and 2019. But it’s transformed my life in 2020, 2021, 2022, and beyond.”
That’s my goal for you… to transform your life without putting your current life at risk.
If you’ve been with me since the early days, and this mindset has helped carry you through tough times such as the 2018 Crypto Winter bear market and the massive COVID sell-off of 2020, I urge you to write in and share your story… so others can see the importance of staying rational.
And if you’re a newer reader, and this message gave you some perspective, I want to hear from you, too.
Let the Game Come to You!
Teeka Tiwari
Editor, Palm Beach Daily