In the world of investments, bull markets are a normal thing. In a nutshell, these are markets with evaluations that are always on the rise. The US has had such a market since 2009; a situation many economists feel is here to stay. On the other side of the mirror, we have a melt-up which looks like a bull market. In it, there is a dramatic rise in the asset valuation of a certain class led by groupthink as opposed to sound investing strategy. A recently published article by Steve Sjuggerud a stockbroker at Stansberry Research predicted that the US markets are headed for one such melt-up similar to the one in 1999.
Mr. Sjuggerud who wrote a little about his experience as an equities trader in 1993 when the Chinese market was given a run-up in valuation. As usual, he got many calls for a piece of the pie which he graciously allotted. However, he got a first-hand experience as the Chinese markets crashed in 1994. Leveraging this experience, Sjuggerud learned how to make money from similar situations. The article then follows that the American markets are headed for the same. So, in case of a melt-up, what is an investor to do?
Stansberry Research advises investing in opportunities that will grow exponentially during the melt-up. Because it’s going to be felt thought the markets, you shouldn’t be scared of big drops in market valuations of the markets you are looking to invest. The market corrects itself recovering lost value and growing to new heights. He highlighted that in the 1999 melt-up there were drops of up to 10%.
Know when to sell
Since every skyrocketed valuation at some point must start coming down, investors are urged to plan for this eventuality. Stansberry Research recommends having proper systems that alert the investor when to sell and take positions in less volatile assets. This way, the clever investor is covered in the event the markets should turn.
The forward-thinking nature at Stansberry Research has made them a formidable company in market predictions. So much so that they have garnered a reputation for it and doing it justice at every turn.