What do the most successful subscribers do when the markets are bearish
Whether it’s following the Bowser Game Plan to the letter or not following it at all, every investor has his or her own strategy. Over the past couple of months, the newsletter has discussed strategy often, and for good reason: an investor must stick to a plan especially when the markets go awry.
The current market has left a fair share of investors scratching their heads. In response to this current market madness, Editor Thomas Rice spoke with a number of subscribers who have succeeded over the years, gaining their insights.
“Over the past couple of months, my stock account (although down) has declined less than the others.”
As expected, results amongst the subscribers have varied. However, one thing remained consistent: their portfolios have performed better than others recently. Not all portfolios were up, but each of the subscribers had a positive outlook.
Ralph Mauro has used the last couple of months to “review and re-evaluate [his] holdings.” This ensures that quality stocks make up his portfolio for a full recovery upon turnaround.
“We follow the plan on the sell side. Selling on a double has let us take out a little cash to invest in the next Company of the Month.”
The subscribers follow the Game Plan, although some apply unique twists. They all invest in Companies of the Month. As Ralph Mauro suggests, “Buy out of favor companies with good opportunities.” They also all agree that diversification is essential.
One unique twist that successful investors apply to the Game Plan is to not chase a recommendation. Philip Lupi “places an order at the price the newsletter recommended the company.” Then, he waits until it comes back down after recommendation to buy. Philip and other subscribers effectively use limit orders, which define an exact price under which the purchase will occur. By doing so, the investor is protected from chasing a stock higher, which can reduce gains significantly in smaller stocks.
“When the market goes nuts, I go fishing or hunting. I refuse to join the parade of people panicking and starting the cascading lemming effect.”
With regard to dealing with the stock market, each subscriber made the following points:
- Stick to the plan; and
- Don’t pay attention to market fluctuations.
Do pay attention to specific companies with regard to the Game Plan and their financials. A well-diversified portfolio containing quality, undervalued stocks is in a good position to recover.
To this end, all of the subscribers use down markets to their advantage by seeking opportunities. As Marq Apel explains, “A down market is an opportunity to get stocks at a discount.” Rather than panicking and selling, figure out which companies are discounted. Consider “re-acquiring or adding to positions,” as Roger Otting describes. Ed Kaulbars even has a system in place: “When the market dips or a stock slides more than 25% without bad news, I buy more of that company. Many times it will bounce back and double before the original order. To me, when the market heads south I rejoice, ‘STOCKS ARE ON SALE.’”
“Understand the companies you’re invested in; don’t commit more than you can afford to lose; have a long-term vision and stay poised.”
Several subscribers provided tremendous advice. Perhaps Roger Otting puts it best, “Bear markets will come and go. This, too, shall pass. The Bowser Report is not a get-rich-quick scheme.” Maintaining a long-term focus will help avoid panic caused by short-term fluctuations.
On that note, one of the most important points and a fundamental key to successful investing is patience. The stock market has proved over and over again that it will recover. Not only will it recover, but it will reach new heights. Stick to a plan and maintain a diversified portfolio containing undervalued companies. “Don’t give up,” states Ed Kaulbars. “Keep reading the newsletter and follow it the best you can.”
To leave on a humorous note, Roger Otting included a quote from Louis Rukeyser, host of the television show Wall Street Week from 1970 to 2002: “The stock market is going to fluctuate. Sometimes it will fluc down; other times it will fluc up.”
These are good insights. Thanks for sharing.