Dow Crashes: Why it May be Time to Be Greedy

04:33 10/11/2018

For a while, it looked like the Dow Jones could climb back into the green and stay there.

But that didn’t last long at all.

Not only are we nearing elections, but bond yields spiked. Fear is spiking. Volatility is exploding. And the Dow sank 1,400 points in two days. In fact, the Dow is now below its 50- and 200-day moving averages. And from what I can see, there’s no support until 24,000.

That’s another 1,052 points lower.

The fear gauge, the famed VIX just jumped from 11 to 25.74 in just days. We’re now above the VIX high of March 2018. And should chaos continue, we could test the February high of 50.

Granted, it’s doom and gloom, but pay close attention to markets technical patterns.

Not only is the Dow Jones outside its lower Bollinger Band (2,20), Williams’ %R and RSI are now deep in oversold territory. The last time it was this severe was June 2018. That was before the market recovered from 24,000 to nearly 27,000.

Don’t let the chaos scare you out of the market.

Instead use the fear of a volatile market to buy more soon.

Never ignore excessive fear. Instead, take full advantage of it, especially if it’s overdone.

That’s where value can often be found.

As Warren Buffett would advise, “Be fearful when others are greedy and greedy when others are fearful.” Or, as Sir John Templeton would advise, “Buy at the point of maximum pessimism.” Or even as Baron Rothschild would tell you, “Buy the blood in the streets, even if the blood is your own.”

That’s because fear often breeds opportunity.

In fact, crisis investing is one of the world’s greatest wealth-building secrets known to history’s greatest investors. The Rothschild family used it to make millions on the London stock exchange back in 1800. Sir John Templeton exploited this very same strategy to quadruple his portfolio after the Great Depression, buying on excessive pessimism.

Warren Buffett used this strategy after the financial crisis of 2008 and made billions of dollars.

In short, fear is a smart investor’s best friend.

This article has been provided by a Chasing Markets contributor. All content submitted by this author represent their personal opinions, and should be considered as such for entertainment purpose only. All opinions expressed are those of the writer, and may not necessarily represent fact, opinions, or bias of Chasing Markets.
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