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A Behavioral Approach to Investing

Using Scientifically Engineered Models

Not another COVID-19 Update

If you're like me, you've been inundated with COVID-19 updates. I hit the breaking point this morning and recorded this video. Compared to the 60 minute long webinars everyone keeps sending me, I hope this 10 minute video tells you everything you need.

Here are some of the highlights:

  • SEM has been here before.
  • Every crisis is different, but they all tap into our behavioral biases, which is why SEM is structured the way we are.
  • From a big picture perspective,we need to realize where we are at:
    1. We entered the year overvalued, businesses were over-leveraged, individuals barely had any savings & the government was set to borrow over $1T dollars --- without a recession.
    2. Stocks are basically where they were at the end of 2018. Earnings only grew by 3% in 2019, yet stocks went crazy.
  • Now the question is what happens to the economy and corporate earnings. Based on past recessions, the market could fall another 20-33%.
  • This is where I have an issue with all these special webinars. I can only think of a handful of people who going into the year were concerned about the state of the economy and markets. SEM was one of them.  Why would you listen to anybody who saw zero risks for 2020 a couple of months ago?
  • Again – stocks were overvalued, the economy was slowing, margins were being squeezed, consumers had little savings, businesses were overleveraged and the government had a runaway deficit. Banks were having a hard time financing that deficit, now we see the Fed struggling to prop up the bond markets. I've heard nobody on these "special webinars" mention any of these things.
  • I don’t want to be negative right now, but this is something you shouldn’t take lightly. Every “special webinar” I’ve listened to had the same message as the beginning of the year – stay invested in stocks.
  • This is likely going to play out much more like 2001 and 2002 – all kinds of stimulus thrown at the economy, but a major STRUCTURAL shift in our economy. We won’t revert right back to where we were.
  • There are two kinds of bear markets. A "correction" inside a growing economy is short, usual no more than 25% and recovers quickly. A RECESSIONARY bear market is long (18-24 months), ultimately loses 45-55%, and has many false rallies that bring hope. Make sure you are ready for the recessionary one. Most people cannot handle that type of pain.  SEM IS READY FOR EITHER SCENARIO!

With that, stay tuned to the SEM Trader's Blog. If it matters, we will tell you. If it doesn't you can ignore it.

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New Kent, VA
Jeff joined SEM in October 1998. Outside of SEM, Jeff is part of the worship team at LifePointe Community Church where he plays the keyboard and bass guitar. He also leads a small group Bible study.