How to Reduce Your Stock Market Stress

Transcript:

I’m Jason Kelly with The Kelly letter. Thanks for watching today.

I have noticed in my inbox and phone calls and other means of communicating with subscribers, that people still aren’t quite getting the spirit of my signal plans, which take away all stress from indecision in the market. I want to take you through how that works.

I think people understand by now that they cannot time the market perfectly. But what they don’t understand is that they’re going to keep trying until they offload the responsibility. Think of yourself, for example. Here we are at the end of April. The beginning of March, when the market started its waterfall cascade, how did you feel? Your first instinct as the market was crashing was probably not, “Wow, how much of this can I buy?” If it was your instinct, then congratulations, you probably don’t need to hear the rest of this. But maybe you do. Keep listening and you’ll see why.

0:54
When we did hit the bottom on March 23—a little earlier for some indexes, but March 23 basically—we started shooting higher. Every step of the way so far and even today, as I talk to you at the end of April, most of the pundits are saying it’s going to crash again, the economy’s shot, we can’t possibly go higher.

None of this is news to you, I’m guessing. You understand the pundits are wrong half the time, nobody can call the tops and bottoms.

What I’m emphasizing today is that you will keep trying to call tops and bottoms as long as you think it’s up to you to deploy your money on the schedule determined by your gut. Now, don’t run away from this, don’t think that you’re exempt from it because none of us, not one of us, is exempt from that instinct.

1:41
Until you completely offload the responsibility of calling when to get in the market and get out of the market, you will keep trying to do it yourself based on all the inputs you’ve received. And we all have more inputs now than ever before, which means analysis paralysis is around every corner for today’s investor.

2:00
Now, I’m not talking about traders. If you’re a day trader, you’re not interested in my program anyway. But if you’re a person who just wants long-term market beating performance with minimal stress, and no stress from indecision, then this philosophy is for you.

Let me take you through some steps to illustrate how this works, the difference between saying, “I don’t mind if I don’t get the exact bottom and I don’t mind if I get the exact top,” and “It’s not my responsibility anymore, I don’t know, the system does what it does and I just follow it and I know it works over time, so I don’t care anymore where the bottoms and tops fall.”

2:35
The Kelly Letter Sig System did not get the exact bottom on March 23. It came close—about a week later, not quite, it did make its call and bought at the end of the third—the first quarter, rather—and that was, that was excellent. The market’s up dramatically in April, so that’s been very good.

2:51
But people following the system didn’t try to call that; they weren’t thinking every drop down in March, “Is now the time to buy? Is now the time to buy? If it is the time to buy, how much? Do I move in a third of my total amount of capital that I intend to invest during this? One half? When do I invest the other remaining two thirds or one half?”

The decisions really never stop. Because if you’re approaching the market that way, you’re trying to decide on the way down, when you get back in; then you’re going to try to decide on the way back up when you get back out. Because who knows when it’s going to start going back down again? And then when it’s going to start going up.

Obviously, it just never ends. The market line is constantly moving. So, until you offload the responsibility of calling those inflection points from your plate, you’re going to keep trying to call them. It’s just instinct. I’ve got this much capital to invest. I want to do it at the right time. What is the right time?

3:50
Wrong.

When you give it up and give it over to the Signal System—another system could work, too, but the one I developed and the one I use is the Signal System, a quarterly system that moves money in and out of the market based only on price fluctuation, that’s it, price change only.

When the stock fund’s price is way down the signal is to buy more at the end of the quarter. When the stock fund price is way up, the system signals to sell off an amount of that at the end of a quarter. That’s it, there’s more to it but that’s the basic idea.

It’s prices down, buy; prices up, sell—which we all know to do but we cannot do trusting only instinct and inputs from wrong-half-the-time pundits.

So how does this differ, the philosophy, the mentality, the psychology, the emotions of going through the waterfall crash and the V spike?

I’ll tell you how. As the market’s crashing you think, “Hmm, I wonder how low it will be at the end of the month? Or you don’t think anything, maybe you just tune it out and watch what everybody’s saying, the screaming and running around, the gnashing of teeth, and everything that comes every time, ad nauseam and it will do so for the rest of your life.

5:02
At the end of the quarter, you run the signal, you buy the amount it signals, and it is proportional. That’s another way the responsibility is not yours. I am not deciding how much to move in at the end of March, the system is deciding based on how deep it is. In the case of this past March 2020, it was very deep and in most cases called for moving all money into stocks, which from the perspective of the end of April was a pretty darn good move to get, right?

And you didn’t have to make the call.

And here’s the other thing: The system says just make the market order on the opening Monday after the signal happens over the weekend. So you get the signal on Sunday morning when the letter comes out, for example, or if you run it yourself, and it’s a market order placed for Monday morning. We don’t care if it’s exactly the same as Friday’s close. We don’t care because the system can adjust one quarter later to you having paid more or less than the price you use to calculate—everything is automated.

5:58
Everything is proportional and the system self adjusts, which means you can just say, “Not my problem. I don’t know where the bottoms are, where the tops are, I don’t know where the next crash is or the next spike is. I just do not know, I do not care. I cannot know and that’s why I do not care. I’m going to put it all on this system.”

Which is how, when, oh my gosh, the system bought at the very top of the day when it opened and the security declined during the day, and oh my gosh, if I’d only waited till noon—all of that, gone. Gone. Signal System investors suffer none of that.

“Oh, that’s the price I got.” Fill in the cell in the spreadsheet, you’re done. A quarter later fill in the next price you get in the spreadsheet, you’re done. It even tells you what to do, how much to buy, how much to sell.

6:45
Now, the automation of this, you might think, “Well, I could do this on my own, mid-quarter, whenever I want. You know, based on the headlines I’m seeing.”

If you’re thinking that right now, you’re still missing the point. You really are. You’re not giving over all of this to the system.

When you do, you’ll hear this deep, abiding silence instead of this constant cacophony from the media.

Constant conflicting headlines, constant “What if? What if? What if?” Possibly the classic sleepless nights, possibly the distraction at parties. Whatever it is that eats at you, gnaws at you, hollows you out from the inside from the market, goes away.

Because whatever happens is no longer your fault. That’s key. How many times have you said, “Oh, if I just waited a day,” or “Ah, if I just waited an hour,” or “Dang, why did I set my limit order at $55 instead of $53? I thought for sure when it was at $55.15 it would drop down, ah I thought it would just go down a little bit and head right back up because it’s been going up.”

I’ve heard it all. I have heard it all. “I set my limit order at $10. And it got down to $10.09. And now it’s $20 and how could I have missed it?”

7:58
A. You’re going to miss fewer of those because the system just acts in a rote manner.

B. Whatever imperfections the system delivers are not your problem. They are not your fault.

It’s a calendar based, mathematically founded approach that absolves you of all responsibility. So, “not my fault” is a pretty high, pleasant privilege to have when you’re in the very uncertain business of calling stock prices, which you shouldn’t be in at all or you’ll have the same 50% mistake rate as your favorite or least favorite pundit on TV.

8:35
Consider it. I highly recommend it.

I cannot overstate how much my attitude, my demeanor, my outlook on life has improved when I took out the stress of the wiggling stock market line, automated it, have a higher profit now and don’t care even through major crashes like March 2020.

And if you are a long-term subscriber or somehow tune into what I have to say or write, you can remember this fact. You remember what I was like through the crash of March 2020, about like I am right now—these things don’t bother me. They’re just moving numbers. And when they’re down as deep as they were in March 2020, this system signals to buy, and anyone following it simply does it. And here at the end of April, they’re not saying, “Oh, why didn’t I buy?” because—guess what?—they did.

And let’s say, for example, the system didn’t run until the end of April. Let’s say it was running right now as I’m recording this at the end of April instead of the end of March. So the buy signal was coming one month after the bottom instead of right close to the bottom.

Even so the stress dissipates because the system wouldn’t signal to buy as much because prices aren’t as low.

And anyway, if the calendar based model had the signal coming down at the end of April, instead of March of the crash, it happened differently so that we were a month away from the bottom instead of right at the bottom, so what? This uncertainty is—listen to the word—uncertain.

We can’t know what’s going to happen, ever, so we stopped trying and the system does the best it can, and the system proves—not your responsibility, remember? The system proves, as it runs in its automated fashion, that close enough is good enough.

10:15
You might think that—you’ve heard me say it, you’ve read me write it—you might think, “Well, if I’m close enough, that’s good enough. I don’t have to kick myself for making mistakes.”

But you won’t forgive yourself. You are too hard on yourself. I’m too hard on myself. We’re all too hard on ourselves.

And if you buy just 5% off the bottom, you’ll think, “D’oh, if only I had been 18 hours later I could have got THE bottom.” You won’t tell yourself that close enough is good enough.

But you will say about an automated system, “Eh, big deal, it was off by a week, it was off by a month. Close enough is good enough. And anyway, it’s self modulating, so the price wasn’t as deep when it decided to buy and therefore it didn’t buy as much. That’s all the governor valve I need on this whole thing,” and your emotions are free to focus on other parts of your life, which is what you should be doing.

11:02
You will achieve a higher performance with lower stress with this plan.

Now, you’ve heard me say these things before, but what’s different about the message today is the importance of offloading the responsibility of calling these turns.

Even if you move gradually or dollar-cost average—that’s one way of moving gradually—but if you move in a different way of moving gradually, that’s all very prudent, good risk management, smart, wise, but you are still involved. It’s still you, you, you.

When you offload the responsibility to a system that proves to you that close enough is good enough—poof—the onus is off of you, performance is up, and you’re a lot calmer, happier investor, which is why you will not puke at the bottom like so many did on March 23.

11:51
I hope this helps and you really should give it some thought. Take a look at the charts on jasonkelly.com. See if that would make a difference in your life. I believe it would.

It certainly has in mine. Thank you.


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One Comment

  1. Joe Petti
    Posted April 30, 2020 at 10:01 pm | Permalink

    Great Motivational Presentation – Thanks…..

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