It’s a tough time to be an investor. Everything is down…

The entire cryptocurrency market has plunged 80% since its all-time high in January 2018. Regulatory uncertainties, infighting within the development community, and poor investor sentiment currently plague the space.

Investors are fleeing real estate as higher interest rates increase home-buying costs… The SPDR FTSE S&P Homebuilders ETF (XHB) is down 15% over the past two months.

Oil prices have plummeted 27% since October 3. The sell-off accelerated after major oil producer Saudi Arabia threatened “economic disaster” if countries sanction the kingdom for ordering a hit squad to murder a dissident journalist.

The stock market is taking on water, too. Since peaking at the end of September, the S&P 500 and the tech-heavy Nasdaq have fallen 10% and 13%, respectively.

And the so-called FAANGs—market generals Facebook, Apple, Amazon, Netflix, and Google parent Alphabet—are in bear territory (considered a 20% drop or more).

The markets are covered in red. Almost no asset class is getting spared.

We get it… These downturns are hard to stomach—especially when they all come at once. So what’s an investor to do?

First, you need to realize that we’ve been here before. Then, you need to look at the big picture…

Markets Don’t Go Up in Straight Lines

All markets go through cycles. Some are longer than others.

Crypto investors are acutely aware of this. Over the past five years, the crypto market has had multiple ups and downs.

As you can see, bull markets have followed every bear market. And we think this time will be no different.

In fact, it likely amuses crypto investors that some people worry about a 10% drop in stocks. After all, cryptos are much more volatile and have wilder swings than stocks.

Nevertheless, over the past 68 years, the S&P 500 has had 36 corrections of 10% or more. That’s about one every two years. So we’re not experiencing anything unusual.

Here’s the thing…

As scary as these corrections are, they rarely turn into full-blown bear markets. Of those 36 corrections, 27 (or 75%) ended before a crash.

It’s important to put these corrections into context. Otherwise, you’ll panic-sell at the worst time and miss out on the rebounds to come.

The Big Picture

At the Daily, we remain bullish on both the stock and crypto markets.

We know that’s a difficult position to take when the crypto market seems like it’s flat-lining and stocks are in free fall. But the key to being a smart investor is to look at the big picture… And the big picture is encouraging for both markets.

Despite the gloom and doom you read in the mainstream press, institutional investors are pressing ahead with their adoption of cryptocurrencies and crypto products.

In the coming months, we’ll see a new crypto exchange launched by the Intercontinental Exchange—which owns the New York Stock Exchange—and trading platforms from major Wall Street firms like TD Ameritrade and Fidelity Investments.

Here’s what world-renowned cryptocurrency expert and former hedge fund manager Teeka Tiwari recently told me about these institutional inroads:

Knowing that we’re going to have nearly 500 million new buyers who can get into cryptos through traditional financial platforms is exciting. Ignore the volatility. It will blow over and ultimately make bitcoin—and crypto in general—stronger.

There are plenty of reasons to believe the stock market will resume its uptrend, too.

As we’ve pointed out in the past, unemployment is low, and wages are rising… Consumer sentiment is optimistic… And the overall economy is on solid ground.

Here’s what our Wall Street insider, Palm Beach Trader editor Jason Bodner, recently told me:

This volatility has been gut-wrenching for well over a month now. But I’m still bullish. How can that be when we seem to keep going lower? To quote Led Zeppelin: “The Song Remains the Same.”

Jason says the market’s fundamentals remain strong. Nearly 80% of S&P 500 companies reported positive earnings surprises, and over 60% reported positive sales surprises in the third quarter of 2018.

He also said that earnings growth is the highest it’s been since 2010… and stocks are relatively cheap compared to their five-year averages.

Here’s the bottom line: The long-term outlook for cryptos and stocks remains bright. These pullbacks are short-term in nature. You just have to ride them out.

Stay the course, and stick to your quality investment ideas. You’ll be happy you did.

Regards,

Nick Rokke
Analyst, The Palm Beach Daily

P.S. It’s hard to hold onto your positions as you watch your account dwindle day after day. Sometimes you just feel like you have to do something. If that’s you, in tomorrow’s Daily, I’ll tell you where you can shelter your money from the turbulence we’re seeing.

MAILBAG

In yesterday’s Daily, Teeka Tiwari explained why bitcoin hasn’t reached $40,000 yet. Readers chimed in…

From Andrew H.: My thanks to Teeka for addressing the complaints he’s received about his bitcoin price prediction. This was a big concern I had, but I feel reassured by his upfront admission of inaccuracy about investor sentiment (don’t hear those much in society now) and his thorough decision-making process.

From Billy T.: I just peeked at the cryptocurrency market cap and noticed that there’s a splendid SALE going on now!! Woohoo! Time to back up the truck.

From Michiel S.: Please pass along my accolades to Teeka. I think he’s doing a really excellent job of guiding us through this current round of volatility… and providing his extremely valuable insights based on his 30-plus years of experience. I also appreciate his honesty, sense of humor, and positive outlook.

Are you concerned about the current volatility in the markets? Email us your questions and comments right here…

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