Investing conservatively is how the aging investor population needs to approach the stock market. As it turns out, investing in dividends stocks carries much more risk than you may think.
Dividend stocks (SPYF) fell 47% during covid, while growth stocks (SPYG) fell only 32%.
Why is investing conservatively in dividend stocks so risky? It’s fairly straightforward. Most of the money invested in the stock market is from long-term passive investors. These investors naturally want to own the large-cap stocks, which in most cases happen to be dividend-paying. So, if most of the money is positioned in these companies, guess which shares get sold the most during a market crisis or bear market, large-cap dividends-paying stocks.
When these passive investors start to call their advisors to liquidate their stock holdings, they tend to move their money into bonds which is partly why bonds rallying bonds rally.
CONSERVATIVE INVESTING IS NOT WHAT YOU THINK
The chart below shows why dividends are a losing bet despite what everyone else thinks.
New conservative investor comment
Lately, we have been sharing some of the thoughts and questions that our subscribers post on our market update boards. Today is no exception, with Chris M commenting,
“I’m young enough that I haven’t really paid the due attention to learn in a bear market before. This is absolutely fascinating. I took the advice here some time ago and started taking control of my retirement accounts (transferring into self-directed) and putting them into cash. This has saved me a lot of value already/so-far.”Chris M
Chris M’s comment ties directly into what I have touched on in the past stating:
“Once you embrace cash as a position, your trading and investing become incredibly controllable and enjoyable.”Chris Vermeulen
Why We Believe Strongly in investing conservatively
Here at The Technical Traders, we are a unique group of traders/investors who tactically navigate the market with our conservative investing strategy. We don’t believe in trading any more than we need to, and we do not believe in holding stocks, bonds, or commodities when they are falling – period.
Remember this – though you may love a certain stock, ETF, index, etc., it does not love you back. It does not care that you have put all your money into its performance. Put another way – a stock, ETF, index, commodity, etc., will not behave as you want it to, just because you love it.
As a new investor experiencing our conservative investing for retirement approach, Patrick B, iconically stated, “hope is not a strategy.”
We are calm, cool, collected, and cash-rich during market volatility, correction, and bear markets. Why is this? Because we follow the rules of our strategies and all indicators and alerts had us safely out of the markets weeks ago. Just as Chris M said, “this is absolutely fascinating.”
The reality is – and it’s this way with EVERYTHING in life – once you have mastered something or have a strategy to follow, the process can feel relatively slow, dull, and boring. What this means is that you are in control of your money and emotions. And that, my friends, is priceless!
investing conservatively means Patience.
Patience Is A Learned Behavior And
Sometimes It Takes A While To Sink In
Most people, especially the younger generation, simply don’t have the patience and don’t want to hear about investing conservatively or anything that may be slow or boring. They would rather keep buying the fad stocks, hold them and lose money until they are forced to give up.
A perfect example is how two million Robinhood traders have had their accounts wiped out already. That was over two weeks ago when stock prices were much higher, so millions more have likely blown up their accounts since then.
Unfortunately, we can only help those with the correct mindset and who value conservative investing where we trade less and risk less by holding cash at critical stages of the investment cycle. This allows us to make more money in the long run. It’s likely the reason why you are here trading/investing with us at TTT or are starting to recognize the value we offer. Granted, it is hard to see the full value until after a bear market has occurred because that is when you know where you stand among other investors.
Where To Set Your Focus
Bottom line, growth stocks topped out Feb 2021. Crypto, NTFs, and even collective cards all peaked out shortly after. With bonds currently in a bear market, we need to focus on preservation and will only trade when high probability trade signals form. There is still much more room for improvement for us to manage our money as I never stop learning and adjusting my analysis and strategies as the market evolves. Our ultimate stock and bond replacement strategy is something we will share more of in the future.
HOW WE CAN HELP YOU learn to invest conservatively
At TheTechnicalTraders.com, my team and I can do these things:
- We reduce your FOMO and manage your emotions.
- We have proven trading strategies for bull and bear markets.
- We provide quality trades for investing conservatively.
- We tell you when to take profits and exit trades.
- We save you time with our research.
- We provide above-average returns/growth over the long run.
- We have consistent growth with low volatility/risks.
- We make trading and investing safer, more profitable, and educational.
We invite you to join our group of active traders who invest conservatively together. They learn and profit from our three ETF Technical Trading Strategies. We can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Chief Market Strategist
Founder of TheTechnicalTraders.com