Keep Cool Now for a Big Payday Later

By Tobin Smith

Now we have a group of pundits telling us that we have another "lost generation" for stocks on our hands -- a la 1970 to 1980 where the Dow (DJI) started at 800 and ended there.

Well, I have some news for you: In 1970, a $1 million balanced portfolio of domestic stocks, international equities and fixed income (adjusted down to only a 5% annual Treasury return to more closely reflect current rates) was worth nearly $2 million at the end of that "lost decade." Not too shabby!

More importantly, if you bought the growth sectors of the market in that lost decade and discarded the low-growth sectors -- as we do at ChangeWave Investing -- your returns would have been more than 300%.

Stay Cool When the Heat is On

The path to profits requires that you keep your head when others are losing theirs.

Circumstances are always different in every bear market -- the one constant is that the business cycle always tops ahead of them and bottoms six to nine months in advance.

I believe we are getting close to the economic bottom for a number of reasons. But the two I like best -- after our ChangeWave Alliance data -- are that we are starting to see the "vulture" funds pick at financials and that the weak players are going bankrupt.

As gruesome as it sounds, this is capitalism at its best!

Capital is being taken away from the weak and going to the strong -- like a forest fire that clears the way for new growth.

As the weak players exit the market, this creative destruction will sow the seeds for the next bull market.

This is exactly how the business cycle should work. All we have to make sure of now is that the government does not interfere too much with this process.

The next bull market is ahead. Join us at ChangeWave Investing to take advantage before the rest of the world wakes up.



Toby

P.S. In order to grow wealth in this bear market, you must keep your cool, roll with the punches and anticipate the next wave of market growth before other investors catch on. Join us at ChangeWave Investing and receive the information and guidance you need. Accept your 90-day, risk-free trial today.

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Tobin Smith is the founder of ChangeWave Research, the editor of ChangeWave Investing and ChangeWave MicroCap Investor and a contributing market analyst for Fox News Channel. His market commentary can be found in the ChangeWave WaveWire and he provides more specific recommendations and advice through his ChangeWave Investing service. Click here to learn more about ChangeWave Investing.