Stocks Are Tumbling… Why You Should Buy the Dip

Legacy Research Group

September 20, 2021

Chris Lowe
Chris Lowe

September stinks for stocks… Our “billion-dollar trader” on why you should buy the dip… In the mailbag: "Your newsletter cuts through the BS"…


Stocks are tumbling as I (Chris Lowe) type…

The S&P 500 is down 2.4%. And the tech-heavy Nasdaq is down 3.1%.

If they stick, those are some of the steepest one-day losses we’ve seen in seven months.

Folks in the mainstream press are connecting the skid with the potential collapse of Chinese property giant Evergrande.

Reporters have also blamed the looming debt ceiling clash on Capitol Hill.

But as you’ll see today, we should expect the stock market to be bleeding red right now.

Historically, this has been the worst week in the worst month of the year.

So instead of selling your stocks, consider buying the dip.

That’s what colleague and former Wall Street trader Jason Bodner is urging his readers to do.

That way, they can profit from typically strong gains in the final three months of the year.

History has a clear message for us on this…

Since 1960, the S&P 500 has averaged a positive return in all but two months of the year.

That’s according to figures from Rob Hanna at wealth management firm Capital Advisors 360.

One of these two months is June. But the average loss has been tiny… just -0.01%.

The other is September. It’s averaged a return of -0.59%.

And the average return for the week after the third Friday of the month – this week – has been -0.84%.

So all the net losses for September over the past 60 years have happened this week.

That’s why Jason isn’t worried about this week’s losses…

Jason is a true Wall Street insider.

For years, he oversaw billion-dollar trades for institutional investors at financial services firm Cantor Fitzgerald. He was one of the few guys there authorized to make trades that big.

These days, he uses his proprietary trading algorithm to track when institutional money piles into certain stocks. This is how he helps readers at our Outlier Investor advisory “catch a ride” as big-money investors push stock prices higher.

So far, the gains have been massive. His top recommendations in the model portfolio are up 145%… 351%… 379%… 386%… and 711%.

Bill Gates and Fellow Billionaires “All In” on This Small-Cap

Jason has had a ringside seat to every pullback, correction, and crash over the past two decades. It’s taught him a powerful lesson about how to get rich in stocks…

I started my career on Wall Street just 10 weeks before 9/11. I then watched as Enron and WorldCom collapsed along with the global stock market.

After, I saw stocks recover to giddy new highs. It seemed nothing could bring the market down. But in 2007, greed and leverage in the housing market did just that. Clients of mine were in business one day and insolvent the next. Millions of Americans watched their 401(k)s melt down – including me.

But it all came back because I didn’t sell.

Most investors try in vain to time the market. But Jason knows it’s better to wait it out.

Every time the stock market has fallen, it’s then made new highs…

I’m not talking just small falls like we’ve seen today. Big ones, too.

Since the rebound from the 2008 crash, the S&P 500 has gone through 11 drawdowns (peak-to-trough falls) of 10% or more.

It’s also seen two drawdowns of 20% or more.

That’s about the same pace of corrections the market has seen going back to the 1929 crash.

But selling your stocks during these drops would have been a mistake. Take a look…

image

Each time the S&P 500 has fallen, those who were patient have been rewarded as companies' operating performances turned around and share prices rose again.

So don’t sweat the bearish headlines…

As I’ve been showing you, it’s normal to see negative returns in September… particularly this week.

And as Jason showed readers of our Bleeding Edge e-letter, we’re heading into the best three months of the year.

He looked at fourth-quarter returns for the Dow, the S&P 500, and the Nasdaq from 1990 to 2020. And as you can see in the next chart, the future looks bright…

image

That’s why buying the dip makes sense. I’ll leave Jason with the final word on that…

The end of the year shows us a promising picture. So we should buy any dips in the coming weeks. History suggests that when things look ugly… it’s precisely when we want to be brave and buy.

This can make for terrific gains. And I am confident stock prices will be higher in the coming years – and certainly in the coming decades.

Jason says a great way to take part in those potential gains is to invest in growth stocks through the iShares Russell 1000 Growth ETF (IWF).

It holds lots of Apple (AAPL), Facebook (FB), Amazon (AMZN), Microsoft (MSFT), and Google (GOOG) shares. It’s also filled with smaller growth stocks like the ones Jason focuses on at Outlier Investor.

In the mailbag: “Your newsletter cuts through the BS”…

Trading legend Larry Benedict is one of America’s most prolific moneymakers.

He was featured in Jack Schwager’s Market Wizards book series – alongside Wall Street greats Paul Tudor Jones, Jim Rogers, and Ray Dalio.

Between 1990 and 2011, Larry didn’t have a single losing year.

That includes 2008, at the height of the financial crisis. In a year when most American households lost 25% to 30% of their net worths, Larry generated $95 million.

Now, he shares his insights with subscribers at his Opportunistic Trader and S&P Trader advisories… and in his free daily e-letter, Trading With Larry Benedict.

His guidance helps readers navigate choppy markets with confidence…

I like your newsletters. They are long enough to present actionable information while not getting in the way of a busy day.

A lot of commentaries I skip or delete. But I open these every time.

– William H.

Larry gives very good information in his newsletters. I’m taking it to heart. It helps to know which way the market is going. Thank you.

– Kendall V.

I enjoy reading your insightful comments on markets and how you trade them. I also learned to look at the different indicators you use in preparing to make your investment decisions.

– Gene S.

I enjoy your newsletter, Larry. I get many investment newsletters each day. In fact, most of them are ultimately just promotions for other newsletters.

Your information is actually helpful when it comes to basic investment strategies, cutting through the BS and showing the truly important data and sources to follow.

Much better to teach a man to fish than to give him one.

– Brad C.

Have you locked in profits courtesy of Jason or Larry? Let us know at feedback@legacyresearch.com.

Regards,

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Chris Lowe
September 20, 2021
Dublin, Ireland

Like what you’re reading? Send your thoughts to feedback@legacyresearch.com.

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