We all know the feeling.
We watch as the stock market drops…
At first we tell ourselves: “It’s okay. I’m in it for the long run.”
And then the market drops more … to the point where our original investment is now in the red. You tell yourself again: “It’s okay. I’m in it for the long run.”
And then the market drops more … you are losing sleep, wondering why you ever bought stocks in the first place. Finally, you log into your brokerage account and sell everything.
Then the market rebounds the next day.
I Admit, I’ve Been an
I’ll be the first to admit it.
I’ve done this in the past — long ago, during my less tenured years.
And I am sure you have either done it at one point, or you’ve seen others do it.
Fact is, most Americans trade this way, whether they admit it or not.
They let their emotions run the show once they put money on the table.
With emotions as their guide, they either cut their losses at the exact wrong time as panic sets in…
Or … when they’re making money, greed kicks in and pushes them to hold on too long instead of taking money off the table.
In fact, it’s this erratic, emotional behavior that led to $39 trillion of investor wealth being wiped out in the series of market bubbles and collapses we’ve seen over the last 20 years.
There are countless scholarly works on investor emotion and how investors tend to act unpredictably and irrationally in both good AND bad markets.
One of the best studies was done in 2013 by DALBAR, a leading market research firm for the financial industry. For more than 29 years, they’ve measured how individual investors trade something as simple as mutual funds.
The results are shocking.
In this chart from the DALBAR study, had one invested $5,000 each year in the S&P 500, they would be sitting on a $1,126,972 nest egg.
But instead, the average investor ended up with only $276,163. That’s a loss of $850,809 in pure profit just by being an “emotional trader.”
Think about that … $850,000 in lost profits!
That’s the difference between retiring on the golf course and having to work in the cart barn for extra cash.
According to the study, investors lost massive profits because they kept getting in and out of different funds at the wrong time. For average investors, when markets go up, they think all is well in the world and keep buying in.
The problem is that they have no systematic way to evaluate whether it’s a wise thing to stay in the market or get out. It’s all emotionally driven by their present experience.
Just look at what happened during the Internet bubble.
You may remember people were quitting their jobs left and right to become day traders as the stock market kept going up and up and up. In just 4 years alone — from 1996 to 2000 — the Nasdaq jumped 840% — enough to turn a $10,000 investment into a massive $840,000 fortune.
But due to negative emotion, most investors weren’t even in the stock market before the tech boom took off. They were still licking their wounds after the market crash in the late 1980s and the recession that followed. That was their recent experience, so they were out of the markets in the early 1990s.
But once they saw the media in the late ‘90s touting how “dot-com” millionaires were being minted in the stock market nearly every day, investors saw that they were missing the party, so they jumped in with both feet.
In this chart, you can see a volume spike in the last quarter of 1999, sending the Nasdaq up to an all-time high of 5,000 by the first quarter of 2000.
And all this buying was done on emotion.
Most investors hadn’t done their homework.
And with their emotions running riot, they started buying stocks hand over fist in late 1999, only to see the market tank just a few months later, losing a whopping 76.9% and wiping out millions of individual investors.
The same thing happened again leading to the crisis of 2007; this time instead of tech stocks, it was real estate. But the catastrophic effect of investor emotions was practically the same.
In just 5 years, from 2001 to 2005, new home prices jumped an eye-popping 65%. Yet all this growth was wiped out in a fraction of the time as the real estate bubble burst.
The point here is that once again, investors were letting their emotions rule the show and ended up getting caught up in the hype — only to get crushed when the market turned.
Escaping the Nightmare of Emotions
Livermore understood how to use emotions to his benefit.
Look at his quote one more time:
All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.
Greed, fear, ignorance and hope dictate the market.
But he doesn’t say this is a bad thing.
He says: “That is why numerical formations and patterns recur on a constant basis.”
So he developed a formula to recognize those patterns and profit from them. (Unfortunately, Livermore failed to follow his own formula … succumbing to his own irrational and emotional intuitions.)
Hence, the key to escaping this nightmare of emotions is to have a rules-based system for investing that recognizes certain patterns and numerical formations.
Of course, “Wall Street” will tell you the best system out there is “buy and hold.”
And that is fine … if you enjoy watching your investments suffer through massive market crashes … such as the 50% crash in 2000 and the 58% crash in 2008.
And it is fine if you are okay with Wall Street taking their fees to manage your money.
For others, such as me, there are better systems in place that allow you to achieve better returns with less risk.
Take, for example, the billionaire investors that James Dale Davidson spoke about yesterday.
- Jesse Livermore turned $3 million into $100 million by using the “Livermore formula.” (Livermore later lost all of this money. The reason, he admitted, was because he failed to follow his own rules.)
- George Soros uses “reflexivity” to make money in the markets … like the time he made a billion dollars “breaking the bank of England.”
- And John Paulson uses an “events-driven” formula to make money … like when he shorted the housing market and raked in $4.9 billion.
Each of these men had a rules-based system in place.
That’s because real wealth is only made when emotions are removed from the equation.
And the only way to do that is to have a proven system that shows you exactly what to trade, why to trade and when to trade.
No More Stress and …
A Lot More Profits
Years ago, James Dale Davidson and his team (headed by Charles Del Valle) started on a project to code their own system for investing.
A system that could make money no matter which way the stock market would go.
It has been quite a journey.
One that involves millions of dollars and thousands of man-hours … one that took them far back into the history of trading and into futuristic technology to pinpoint the big gains.
But now that we see the results, we know that it has all been worth it.
Below is a rough chart of the backtesting that shows you the returns that could have been achieved over the last 2 years alone.
While the stock market went virtually nowhere, the backtests show this system pinpointed 79 incredible gains.
Some were as high as 277%, 333% and 367% … others were your typical 39%, 48% and 85%.
In all, the cumulative gains add up to 8,494% … in just the last 2 years.
But We Can Target Stock Market Crashes
For Even Bigger and Faster Gains
James Dale Davidson and Charles Del Valle have backtested this system for a decade.
What is so impressive is how well it did during the 2008 stock market collapse.
The tests show it could make gains of 240%, 357%, 431%, 670% and even 1,269% … within a month or less.
My point … with a massive stock market crash around the corner, these are the exact types of gains we will be targeting over the next year.
For this very reason, James is willing to guarantee that he will show you how to make 1,000% in profits over the next year.
Of course, if things end up as he predicts, you could make a lot more than that. Maybe even 2,000% or 3,000% … turning every $10,000 invested into $200,000 or $300,000.
Just make sure that you…
- Set aside 1 hour of time on Thursday, June 16, starting at 1 p.m. to watch the webinar. I encourage you to be there during this live event. The rebroadcast will be at 8 p.m. — if you would like to attend that instead, let me know by emailing me at CIS@sovereignsociety.com.
- Show up a few minutes early — the webinar will be hosted at CrisisInvestmentSummit.com — and be prepared to learn an amazing way to make money as the stock market crashes 70% or more this year.
- Stay informed. Visit our website to get all the details you need to know about the system and our research that we will reveal on Thursday. The website is CrisisInvestmentSummit.com.
Tomorrow, Charles Del Valle is going to give you more details on how James’ system and our research will give you the chance at windfall profits over the next few weeks.
You will see several of the gains this system has already pinpointed, and you will understand why James is so confident in this system.