Dear Readers,
let's look back for a moment to last week, when sentiment was still comprehensively optimistic among the majority of experts and market participants. In the last article Caution is Advised I clearly pointed out the downside risk and included this chart for the S&P 500:
If we now look at the same chart a week later, the movement clearly took longer than drawn. Apart from that, however, it was executed meticulously. The experience is time and again that tops are predictable, they just very often last much longer than one thinks.
Now, this movement is of course by no means a crash yet, but the danger of it is acute. In the last blog article, I described in detail my preferred scenario for a pullback of around 10%, and such a movement can happen very quickly and in a crash-like manner. Painful for all those who were skeptical of the movement so far and have only recently switched to the bull camp.
Responsible Action in a Negative Market Environment
In my role as a stock market expert and author of the stock market newsletter "Stock of the Week", my main focus is on making the best possible investment decisions for my subscribers. Over the past three weeks, however, my market expectations have continuously deteriorated. Although we were still able to make profits with defensive picks like Deutsche Telekom, I assessed the risk in the broader market as too high. I then decided to temporarily suspend the recommendation of the "Stock of the Week" - a decision that proved to be correct.
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With the Euro Stoxx 600 falling by 3.2%, the S&P 500 by 1.2%, and the DAX by a hefty 3.5%, last week showed how accurate my forecast was. There were indeed some stocks that gained, but the chances of finding them were very low. Therefore, I decided to stay on the sidelines. This defensive move spared my subscribers from the average loss that many investors suffered last week. Our "doing nothing" effectively generated a return of 1.2 to 3.5% - not to mention the saved trading fees.
Patience as the Key to Success
Despite the current correction phase, which is generally healthy for the market and offers potential for strong gains in future counter-movements, I consider it crucial to remain disciplined. It is important to preserve free capital for the right moment.
In turbulent market phases, it is my job to encourage my subscribers to act defensively and conserve their capital reserves. I am proud that this strategy change - supported by the use of Artificial Intelligence (AI) to analyze the stock market - has shown impressive performance.
As a stock market expert, I firmly believe that patience is an invaluable advantage in the world of the stock market. I look forward to continuing to support you with well-founded analyses and strategic recommendations to keep you always one step ahead.
With the Market Commentary of the premium subscriptions, I comment on the markets even more currently. In doing so, I avoid comments for their own sake and only write when the development is really important and meaningful. Whether for the broad market movement or selectively exciting opportunities, such as currently, for example, a short on Bitcoin.
