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Don't Be Glum, Chum. When the Market Crashes You Can Still Taste the Jam

By Malcolm Stacey | Saturday 13 May 2017


Hello Share Pinkers. As the markets are closed, I thought I might do a weekend piece to encourage you to carry on trading once the doors open again. We are constantly reminded on this legendary website that shares are overvalued and about to crumble. I don’t doubt it, though I’m fairly convinced the bull run has some months to go yet.

I think it’s possible the Footsie, which is once again brushing against its all-time high, may not waver until the end of the year at least.

But supposing Tom, David Scott and all the other gloomsters are correct. We can still make money out of the markets without resorting to shorting.

I am not a fan of shorting shares because to do it you need to crave failure. Not your own, of course, but somebody has to come a cropper for shorters to make money. It’s not easy to rejoice at somebody else’s unhappiness. Fortunately, even in a bear market, people who buy shares in the normal way can still make money.

First of all, it should be remembered that when most shares are keeling over backwards, there are inevitably a handful that buck the trend. This happens because there are always a few companies receiving individual good news. A stupendous annual report, a big order, a magnificent invention, a medical breakthrough etc.

If you spread your money to include as many penny shares as possible, which is what I do, then you are almost bound to net a 10 bagger eventually. And one of those can make up for each of your fallers on the worst bear day possible.

Also remember that in a falling market, the size of dividends is not affected. Your big Footsie favourite could lose 10% in one day (such a fall, by the way, is highly unlikely). Yet you would still be earning your dividend, which might be as high as 7% or more.

If the present bull market becomes a bearish one, you can also sell your shares, then buy ‘em back on the bounce. Yes, it might be of the dead cat variety, but if it is, you can sell again and wait for the next rally.

To sum up, gang: when the present bouncy castle of a market springs its inevitable leak, you can still make money. So cheer up - in the Punter’s Return. God bless.

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