Overriding your instincts

The struggles continue.

The S&P 500 is down more than 7% since its peak on February 19. It’s now at its lowest level since November.

The tech-heavy Nasdaq is down over 10% (correction territory)...

And the Volatility Index (VIX), colloquially known as the “fear gauge,” is on the rise.

In short, 2025 has started with a serious case of market whiplash... exactly what our RiskHedge team has been anticipating and warning about.

If you’re feeling anxious, this essay’s for you.

• “Am I being handed a buying opportunity?”

Any smart investor should be asking themselves this question today.

After all… the market had been going straight up, leaving many investors behind.

We’ve all been there—I know I (Chris Reilly) have. Wanting to own certain stocks but refusing to “chase” them as their prices climbed higher and higher. “I’ll buy the next dip,” we tell ourselves.

Well, the dip’s here. But it’s never quite how you picture it, right?

Because a dip isn’t just a number. It comes with a flood of emotions like fear and paranoia. These emotions helped our cavemen ancestors survive. But in modern-day investing, they’ll cloud your decision making if you don’t understand and control them.

To achieve that mastery over your own emotions, there’s no substitute for experience.

• Do you remember what happened almost exactly five years ago?

COVID and lockdowns were wrecking the stock market.

RiskHedge Chief Analyst Stephen McBride urged his readers to buy stocks in March 2020, right when fear was at its peak during the COVID crash.

He sent out back-to-back alerts on March 12 and 13... and put things into perspective in his Disruption Investor investment advisory:

What you do now will define the next 5–10 years of your investing life. Right now, it’s extremely important to understand where we are… and how we’ll set ourselves up for maximum profits in the months ahead.

I’ll be frank... I don’t know if we’ve seen the bottom in stocks yet.

But here’s the important thing: I believe markets are closer to bottoming than most people think.

My research suggests we’re closer to the bottom than the top. And if stocks haven’t hit the bottom yet, they’re at least in the vicinity. And now’s the time to prepare for what’s next.

Those who followed his guidance came out on top as markets staged a historic recovery.

He made similar calls during the brutal 2022 bear market, when inflation fears and rate hikes were battering stocks.

I realize today’s market is nowhere near as bad as 2020 and 2022. But I can see similar emotions starting to creep in.

Remember: We’ve been through much worse. And we had the chance to come out wealthier on the other side by controlling our emotions.

Plus, if you’ve been following along, you saw this market weakness coming.

As Stephen mentioned in early January, “I’m ready for a pullback, and you should be too.”

Now, it’s time to execute the game plan.

But don’t just take our word for it...

• Here’s what the second-best investor in history says about times like these...

I recently shared why I believe Peter Lynch is the best investor not named Warren Buffett.

During his 13 years running the famed Magellan Fund, he generated average annual returns of 29.2%. That turns $10,000 into $279,520.

In his famous 1994 lecture at the National Press Club, Lynch said:

History teaches you the market goes down. It goes down a lot. The math is simple. There have been 93 years this century. The market has had 50 declines of 10% or more. With 50 declines in 93 years, the market falls at least 10% about once every two years.

Of those 50 declines, 15 have been 25% or more. We’ve had 15 declines of at least 25% in 93 years, so every six years, the market has a 25% decline.

Of course, no one knows exactly when the market will turn lower. You just need to know that it will.

Lynch again (emphasis added):

It’s good when the market goes down. If you like a stock at $14 and it goes to $6, that’s great... You hope for $22; $14 to $22 is terrific, $6 to $22 is exceptional, so you take advantage of these declines.

$14 to $22 is a 57% gain.

$6 to $22 is a 266% gain.

The key, Lynch says, to taking advantage of market volatility is understanding what you own.

• So, what should you do with this information?

First, resist the emotional urge to sell great stocks during market weakness.

Second, consider this volatility as a gift—an opportunity to accumulate positions in extraordinary companies at bargain prices.

And finally, if you haven’t already signed up for The Jolt, now is a great time to do so.

Stephen McBride will keep you informed not only on the market’s ups and downs, but on the world-changing disruptions happening all around us… and the companies worth owning no matter what short-term noise may come our way.

Here’s how to sign up for free today.

Chris ReillyExecutive Editor, RiskHedge