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Sid Riggs

I want to start today’s article with a quick survey.

Don’t worry; it’s going to be short, only a couple of questions, and you’re the only person who is going to know your answers. So improve your investing savvy and answer honestly.

It might just help you make a lot of money and sleep better at night

First question: When the markets hit a rough spot this last March, did you start selling your stocks? If the answer to that question is yes, what methodology did you use to justify your selling?

Second question: If you did sell your stocks, what methodology do you now plan on using to know when it’s time to buy again?

Here’s a quick hint: Unless you can quickly answer both of those questions without having to think about it, the answer may be none or no methodology.

Don’t feel bad; every investor (including yours truly) has, at one point or another, made an investment decision without a clear plan (or methodology behind the decision).

Here’s why that can be such a bad idea, and here’s how to tap into the tremendous profits out there if you break out

What Most Investors Do Wrong

According to Barron’s . a whopping 85% of all investor sell or exchange decisions are wrong. Yikes!

The cycle typically looks like this

The market starts to sell off (for any number of reasons), investors get spooked and sell their stocks right at (or just before) the point of maximum pessimism (which usually is very close to the bottom).

Once they’re out of stocks they take their cash and plow it into safe assets like bonds just in time to miss the beginning of the next leg up in stocks. Once their capital is invested in bonds, they have no idea when to shift back into stocks, mainly because of an emotional bias that leaves them too frightened to take on risk.

If that sounds familiar, again, don’t worry you’re not alone. Everyone has made this kind of mistake at least once. We’ll just make sure it doesn’t happen again.

Instead of using market pullbacks as an excuse to bury your head in the sand and catch up on Dancing with the Stars episodes, you can step up your due diligence to create a buy list of your next investment targets.

At first it might seem uncomfortable to be preparing to buy stocks in the face of uncertainty but don’t worry you’re going to be in great company. Warren Buffett, Jim Rogers. and John Templeton all made their fortunes targeting stocks once they were put on sale by market volatility.so let’s follow their lead.

Here are two steps you can take that will not only give you an answer to the questions at the top of the this article, but will also let you use market volatility to your advantage, which is exactly what professional traders do every day.

Step #1

Set Your Sell Plan, Before You Buy

The first step: Always make sure you have an exit strategy (or plan regarding when you’ll sell) before you hit the buy button. This will ensure that you’re always making predetermined strategic decisions rather than emotional decisions.