If you have been keeping up with the crypto markets as I have, you are probably sick of how blood red it's been for weeks.
Things have been similarly grim in the stock market, with the Dow dropping points for 10 of the last 11 weeks.
So where are you putting your money?
There seems to be no hiding place right now, especially if you are the type that spooks easily.
It’s even worse when you realize that the crypto market and the stock market are so wildly co-related right now.
This means that the current dip could be in for a few sequels if you look at the inflation trend.
As am sure you have, I have been spending hours rummaging through business news articles and looking at charts to make sense of all of this.
With the Fed expected to hike interest rates by 75 basis points, inflation could tip us into a recession, and we both know what that could mean for the assets we own.
Of course, we might see a situation where the crypto market ends its correlation with the stock market. A situation that could see us back to the days when crypto was everyone’s safe haven and favorite wallet.
But as for now, those two markets seem to have their fortunes joined at the hip and we must process that with sober and calm minds. So how do you get through this red period without losing your mind?
Keep reading, I’ll tell you how.
1. Keep stock of your emotions
The finance world is full of jargon, charts, and smarty-pants who love to be on TV. Don’t get me wrong, you need to pay your dues. Learn your financial history, read some charts, and understand some fundamental concepts.
The emotions part is not talked about enough though. Yet, this is the most crucial piece to any investment strategy. In-depth knowledge can be severely undermined by fleeting emotions and this is part I want you to grab.
Make every decision right now with your long-term strategy in mind. Keep the emotions at bay and plot your next moves with clarity of mind and purpose. It’s okay to feel, but allow yourself to feel without your finger on the trigger. Taking time to process things almost always leads to the right decision in investing.
2. Assess your comfort level
Once you are done emoting, you can now take a hard look at your portfolio. What is your level of comfort right now? Are you too exposed for your liking in some areas?
I am not a big fan of shorting assets in bear markets, but I do believe in reallocating resources.
When the block gets too hot for your money in one area, you can adjust things and send your money to a cooler and breezier location. Some people might call it, ‘spooking out’ but I call it self-care.
The bears look like they might pitch tent for a while, so you may want to keep some things as they are and move other things around a bit. It’s allowed!
3. Remember, this is a season!
Day traders will never relate to this!
Investors, on the other hand, will and must. I have spoken to some investors privately who were shorting everything and I maintain that they just might regret those decisions. The stock market looks like it's headed to hell right now.
But that’s just the short-term trend. With a bit of a birds-eye view, you will notice what the trend has been historically for the last 5 years.
This 5-year chart tells you that long-term, selling on red days leads to regret. This is an easy case to make in the stock market world. The crypto world is different.
Unlike the traditional markets where we have decades' worth of data, crypto is only about a decade old. I can only show you swings from post-2010. For some, that's a solid reason to be super apprehensive.
However, if you are a stickler for data like I am, the crypto charts tell you a story of bull seasons and bear seasons. A story that is eerily similar to the traditional markets.
By this logic, crypto winter will end in a few months and the sun will shine again. Will the sun catch you outside or under the bed? Think through that carefully.
4. Remain consistent
If you believe in an investment, stay consistent and do not relent. In a previous article, I spoke about dollar-cost averaging extensively.
Yes, I know that cash flow issues are abound right now. But if you have some extra coins, deposit them into your future.
My confident prediction is that in three years, you will regret not dollar costing the crap out of every worthy investment you can get access to.
Maybe I am crazy, but I love going shopping when things are cheaper.
Every chart right now says everything is on sale. So when you are done stacking up on food items, consider picking up some assets. Keep that consistent but you may just dollar-cost average yourself into a new lifestyle in a few years.
5. Cash is king
The most popular phrase during the pandemic in the financial guru world was “cash is trash”. I can’t fault that because those were easier times. It was raining money everywhere.
Stimulus packages, stock market capital gains, crypto markets on a tear, Gamestop, Dogecoin, and other things that are not as generous now as they were then.
The economy looked like it was doing well. When the economy is behaving like that, keeping money in cash looks dumb, but things change.
At the moment, cash is king because everyone is holding on to it. As much as you want to stay invested in assets that might blow up again later, you want to have some cash on the side.
Having a stash of cash can help you make the moves you need to make while there’s stil a financial storm outside. You can buy assets on the cheap and position yourself for an eventual rally.
There’s talk of whether people are recession proof or not. I don’t believe in being recession-proof because that rain will make us all wet. I believe you should strive to be scamper-proof.
Having cash gives you a scamper-proof mindset in times like these. This means you won't be jumping around making reckless financial decisions out of fear and lack.
The bottom-line
Times are tough, so be tougher. Keep your emotions in check as much as possible. Study your portfolio and move things around wisely if you must.
Assess your comfort level while bearing in mind that this is just but a season.
Have a consistent strategy that will set you up to win long term. Having some cash on the side is not a bad thing, in fact it might be the best thing right now.
Take a look at our YouTube channel and find out about what various cryptos are doing during the bear market.