Dylan's Diary

4 Steps to Profit from a Market Crash

Dylan Jovine

Thursday, February 5, 20268 min read

4 Steps to Profit from a Market Crash

Dear Reader,

Today I want to share with you an investing strategy that works in any market.

I’ve used this approach myself for 35 years - a blueprint I learned from people like Warren Buffett and Peter Lynch.

My goal with today’s video is you learn:

How to protect your wealth in the event of a crash, and…

How to turn crashes into the greatest money-making opportunities of your lifetime.

width=549 height=309 /></a></p><p>A crisis is always the best time to make money in the stock market.</p><p>The “good” news is, since the year 2000, we’ve averaged one crisis or market crash every 4.8 years on average.</p><p>Think about it…</p><p>We had the 2000 dot-com crash…</p><p>The 2001 9/11 attack crash…</p><p>The 2008/’09 financial crisis and real estate crash.</p><p>We had the 2020 COVID crash and the 2022-23 inflation crash.</p><p>Sometimes the market crashes because of impossible-to-predict events like 9/11 or the COVID crash, and when the smoke clears and the panic passes, we see a “snap-back” rally. And that’s great - we get to pick up stocks cheap and see them make fast gains.</p><p>But most of the time, before a crash happens, the warning signs are there for everyone to see.</p><p>Right now we see a lot of warning signs.</p><p>The Buffett Indicator - Market cap-to-GDP - is at an all time high.</p><p>The Shiller PE Ratio hasn’t been this high since the dot-com crash.</p><p>We see these warning lights flashing <em>“danger! danger!”</em></p><p>It is time now that we prepare ourselves for what we know is likely to be a hard hit against a wall.</p><p>The reason I wanted to talk to you about this today is that the biggest mistake I see people make is they ride stocks all the way up during a bull market…</p><p><em>And then ride them all the way back down during a bear market.</em></p><p>And, as we learned in the 2000 dot-com crash, stocks could stay low for a decade after a crash - especially bad ones.</p><p>So, today I am going to share with you four steps to prepare for a coming market crash.</p><p>Because, again - it happens every 4.8 years on average.</p><p>And again - we see the warning signs flashing red hot right now.</p><p><strong>>> 4 Steps to Prepare for a Coming Market Crash</strong></p><p><strong>Step 1:</strong> Sell your most-speculative stocks.</p><p>Remember something - all stocks go down in a market crash.</p><p>But the most speculative stocks go down the most and the fastest.</p><p>What is a speculative stock?</p><p>A good rule of thumb I like to use is, <em>does the company earn consistent profits? </em></p><p>If a company does not earn consistent profits, it’s not uncommon to see an 80%, even 90% stock price decline during a market panic.</p><p>Many of these stocks take years to recover, <em>if they ever recover at all.</em></p><p>Given the market is now trading at historical highs, while we have issues like astronomical debt, inflation, and debasement of our currency…</p><p>I would sell any of these stocks as soon as I could.</p><p><strong>Step 2:</strong> Take the cash from the sale of your speculative stocks and invest it in Federal Money Market Funds.</p><p>Now that you’ve sold your weakest positions, you want to put that money to work for you while you wait.</p><p>You want it in money market funds, but not just any money market funds.</p><p>The safest ones are funds that invest in <em>short-term</em> U.S. government securities and/or repurchase agreements.</p><p>You want to be in short-term government securities where the interest you can collect is at the high end of the yield curve.</p><p>A good example of this is the Vanguard Federal Money Market Fund. The symbol is VMFXX.</p><p>But there’s one more thing to consider.</p><p>In real market crashes, money doesn’t just move into cash — <em>it moves out of paper promises entirely.</em></p><p>When confidence breaks, investors look for other assets that don’t depend on banks, brokers, or other third parties…</p><p>That’s why gold keeps re-emerging at the center of every major financial reset.</p><p>That’s why I just published an exclusive report on how to properly play the gold rush and protect yourself from this volatile market.</p><p><strong>Step 3:</strong> Prepare a shopping list of stocks.</p><p>If you’re like a lot of people, for years you’ve watched from the sidelines as certain stocks have marched higher and higher, and people that are not you have gotten richer and richer.</p><p>Facebook, Amazon, Google, Nvidia, Microsoft, Apple - you name it.</p><p>Now, folks who got in early, they made a fortune.</p><p>But you missed out.</p><p>By the time you knew these were the things to own, it was too late.</p><p>Not anymore.</p><p>The great thing about a market panic is you get a second chance to buy the stocks you wish you owned.</p><p>You get a “Mulligan” - that’s what they call a do-over in golf.</p><p>I got this chance…</p><p>I remember in the nineties watching Starbucks march higher every. single. day.</p><p>I watched the stock go from $20 to $40 to $50 to $60 to $70 to $100 a share…</p><p>But I never owned a single share.</p><p>The stock was always too expensive for me.</p><p>I knew that one day the market would give me an opportunity to buy that stock. If I was patient enough, a time would come when it would price right into my strike zone.</p><p>When the market crashed in 2008-09, Starbucks stock collapsed to $20 a share.</p><p>That’s when I started buying.</p><p>And I happily bought shares all the way down to $13.75.</p><p>Within four years, the stock was back at $100 a share.</p><p>Here’s my point: Starbucks was on my “shopping list” before the crash happened.</p><p>Along with a dozen other companies including American Express, FactSet Research, Autonation - these were all huge winners for my personal portfolio.</p><p>This is why it’s so important that you sit down in advance and write your shopping list of stocks, <em>before a crash happens.</em></p><p><strong>Step 4:</strong> Get ready to pounce.</p><p>The great thing about a market crash is that you don’t have to be a financial wizard to make big money.</p><p>You just have to be mentally and financially prepared.</p><p>If you’ve followed these steps…</p><p>Sold your speculative stocks, put that money in mutual funds that invest in short-term U.S. government bonds, written down a list of killer stocks you want to own…</p><p>Now, all you have to do is wait. Like a hunter, it pays to be patient.</p><p>But how do you play out your plan once the market actually does crash?</p><p>Let’s say you’ve raised $10,000 from selling your weakest position, and you’ve invested that money in short-term U.S. government bonds.</p><p>That $10,000 you’ll earmark for 10 killer stocks - category killers.</p><p>So you may plan to put around $1,000 into each of 10 stocks.</p><p>Now, you steel yourself for one of the most unnatural acts in investing: <em>buying a stock when it’s crashing.</em></p><p>That’s a hard thing for a lot of folks to do.</p><p>I look at it like I’m buying a dollar for 50 cents (or 40 cents, 30, cents, 20 cents - whatever it is).</p><p>Just like calling the top is hard to do, so we make preparations <em>around</em> a top for when the crash comes…</p><p>Timing an exact bottom is unlikely.</p><p>So, <em>when do you begin to buy?</em></p><p>A good rule of thumb is to look at the company’s price-to-book value.</p><p>During good markets, great companies tend to trade at 7- to 10-times their book value.</p><p>For example, Amazon is trading around 9-times book value. Facebook around 8, Google 9, Visa 15, Starbucks 8, Tesla around 9/9.5, Microsoft 12.</p><p>The general rule of thumb is the stronger the business, the higher its price-to-book value will be.</p><p>That’s because the stock market rewards companies that earn high returns on capital.</p><p>Using that as an example, I would start buying any of these stocks at four or five times book value.</p><p>Let’s use Meta (Facebook) as an example.</p><p>If I’m to invest $1,000, my first $250 would be at five-times book value.</p><p>My second $250 would be at four-times book value.</p><p>My third $250 would be at three-times book value.</p><p>My last $250 investment would be at two-times book value if I ever got that lucky.</p><p>If not, I would buy it at the other values on the way back up.</p><p>The great thing about this strategy is you don’t need to be a financial wizard.</p><p>You just need patience and foresight.</p><p>And character.</p><p>It takes a lot of character to sit with all that money and do nothing.</p><p>But that’s what we’re doing.</p><p>We’re hunters.</p><p>We’ve got to patiently wait for the thing to come into our target, into our sights, and then, bang!</p><p>This is how in market crashes you 10x your money over the following 2, 3, 4 years.</p><p>It really pays to wait.</p><p>It’s how you could turn $10,000 into $100,000…</p><p>$100,0000 into $1,000,000…</p><p>$1,000,000 into $10,000,000.</p><p>The biggest thing you need is patience.</p><p>Have a great day.</p><div data-below-article-slot class=

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Written by Dylan Jovine

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