The Market Is Bad... But We Can Prepare for Better Days

Editor's note: On Saturday, we introduced Empire Financial Daily readers to Marc Gerstein, the director of research at our corporate affiliate Chaikin Analytics. Today, we're sharing an essay from Marc about what investors can do to prepare for the next "up" cycle in the markets... We've gone back to the future... Inflation, rising interest rates, […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] Editor's note: On Saturday, we introduced Empire Financial Daily readers to Marc Gerstein, the director of research at our corporate affiliate Chaikin Analytics. Today, we're sharing an essay from Marc about what investors can do to prepare for the next "up" cycle in the markets... --------------------------------------------------------------- The Market Is Bad... But We Can Prepare for Better Days By Marc Gerstein --------------------------------------------------------------- [This could literally save your retirement]( The man CNBC called "The Prophet" says he'd put 50% of his kid's college fund in this stock. [He reveals the name and the ticker symbol here](... --------------------------------------------------------------- We've gone back to the future... Inflation, rising interest rates, a recession, and falling stock prices are all plaguing us right now. As one of my colleagues at Chaikin Analytics recently put it, we're now on "the 1980s recession clock." A lot of folks likely find this comparison depressing. But as an investor, it brightened my day... Yes, really. You see, I remember all of the 1980s... Sure, I remember how we got into that mess. I remember the pain. But importantly... I also remember how it eventually got much better. I know the current Federal Reserve is working to make things right. And by following the 1980s playbook, we'll get there. In fact, I believe it will work out even better this time. No kidding. So even though the markets look grim today, let's start []preparing for the next "up" cycle... --------------------------------------------------------------- Recommended Link: [The ONLY way to play markets like these]( Warren Buffett once said, "Price is what you pay... Value is what you get." The best investor in the world knows the only way to prosper (especially in markets like these)... is to invest in VALUE. But this $2 stock could be the last value play in the market today. [See why this $2 stock go up 25 times and still be a bargain here](. --------------------------------------------------------------- Paul Volcker, the Fed chair in the late 1970s and early 1980s, wasn't following an established playbook. He was improvising... Traditionally, the central bank set interest rates by decree. It didn't use the rules-based approaches like quantitative easing and tightening that it does these days. So rates couldn't rise up into the teens, for example, unless the Fed voted to do that. That all changed on October 6, 1979... Volcker's Fed announced it would manage the money supply and let rates go wherever the market took them. And by April 1980, the "federal funds rate" reached a previously unimaginable level of nearly 20%. The Volcker-era change is significant because it paved the way for rates to reach heights at which no Fed governor would've previously voted. But it was brutal for investors... Two recessions occurred one after the other. And the stock market plummeted. But before long, "disinflation" became a buzzword... Year-over-year growth in the Consumer Price Index peaked at 14.8% in March 1980. It fell to 9.6% in November 1981. And it kept falling... By December 1982, it had dropped to 3.8%. And eventually, it slid all the way into the 1% to 3% range that we became accustomed to until the COVID-19 pandemic in 2020. Interest rates fell in tandem. And stock prices soared. Now, many details have changed since the early 1980s. But one thing hasn't... We know we can tame inflation and the economy through changes in interest rates. We also learned the reverse... Through interest rates and boosting the money supply, we can escape crises that might've sparked depressions in past generations. (That's why we recovered from a stock crash in 1987 and other crises in 2008 and 2020.) Will the Fed precisely achieve its targets? Heck no. Humans still run the show, after all. Overshooting and undershooting are aspects of life. Perfection isn't. But we're better off than we were in 1980 in two ways... First, thanks to Volcker's Fed, we now have (and are following) an established playbook that works. Second, we jumped on the problem much more quickly this time. We didn't let inflation rise well into the double digits like in the early 1980s. We don't know when we'll escape this bear market. But we know we will at some point. So let's prepare for better days... Monitor cyclical and out-of-favor sectors. Also consider creating a "paper portfolio" to simulate returns without actually putting any capital at risk. You'll want to do that to stay fully engaged... Earnings guidance, surprises, and results – as well as the ensuing stock market reactions – will help you see that a turnaround is coming long before government economic releases. And you'll see it long before commentators start discussing it as well. If you wait until commentators say "go," you may miss a lot of the upside... In the first three months after the 1982, 2000, and 2008 bottoms, the benchmark S&P 500 Index jumped 26%, 40%, and 39%, respectively. And from there, stocks kept going higher. Memories of painful losses might tempt you to not trust any signals of a recovery. Naysayers will question its sustainability. And "confirmation bias" (interpreting things in ways that conform to previously held beliefs) is real. But it's critical to stay engaged now – and for as long as it takes for the bull market to return... By doing that, you'll be in the best position to recognize the recovery in real time as it happens. And you'll be able to jump quickly into the best opportunities. Sure, the market looks bleak right now. But that's how we can prepare for better days. Regards, Marc Gerstein October 3, 2022 Editor's note: Chaikin Analytics founder Marc Chaikin recently teamed up with Joel Litman – a forensic accountant who has lectured at Harvard, MIT, Wharton, the London School of Economics, and even the Pentagon – to issue an extraordinary market prediction that could trigger potential windfall profits if you know what's coming and how to play it... All while devastating investors who remain in the dark. According to Marc and Joel, what you do in the coming days could determine your wealth for the next decade – [get the details here](. --------------------------------------------------------------- If someone forwarded you this e-mail and you would like to be added to the Empire Financial Daily e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 380 Lexington Ave., 4th Floor, New York, NY 10168 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](