For the last 3 weeks, fears of a global liquidity crisis have sent the US markets into a downtrend. The S&P 500 Index has fallen 148 points from a high of 1554 points to 1406 points currently, a drop of 10%. There is a great possibility that the market will probably correct at least another 4-5% downwards for the rest of the third quarter.

US MARKET – S&P 500
S&P500

This has created a knee jerk reaction to the Singapore market, represented by the Straits Times Index which has fallen 15% from a high of 3690 points to a current 3138 points, with probably a lot more downside to go. So when all the newspapers focus on people’s fears, losses and talk of doom and gloom, people are often surprised when they see me (and many of my Wealth Academy students) SMILING.

Singapore Market – Straits Times Index
STI

So, why do I love downturns? Well, for the last 24 months, the market has been on a super bull run, with stocks returning double to triple digit gains, allowing all major markets to clock in record highs. While I did make lots of money on the way up, I actually sold everything I had about 3-4 months ago while the market was starting to run out of steam (all my students would have heard me say this many times) . I knew that the market run up was way due for a correction, as whatever goes up must first come down (it’s called a retracement) before moving up again.

When the market was at the peak, I didn’t know what to do with all the spare cash I had. There were no stocks to buy has everything was overpriced. Now with this market correction (I hope it goes all the way doooooowwwwn…Ha Ha Ha), all the great stocks that I want to buy will finally be at bargain basement prices again. Great stocks like AIG, UNH, PG, SAY and JNJ are way undervalued. By scooping them up when they hit rock bottom, I have the chance to make all those gains in profits all over again. IN fact, it was reported that investing Warren Buffet is already getting raedy to take advantage of this correction as he reported buying up more stakes in some of thes egreat companies. And of course, my Wealth Academy students will have the benefit of knowing when the right time will be to enter again and what are these great stocks to buy.

At the same time, I also love downturns because the market tend to DROP FASTER than it rises. By buying lots of PUT OPTIONS (which I talked about in my book, Secrets of Millionaire Investors), I have been making a nice profit as the market went down. Just last week alone, I made US$9,800 with Put Options on the S&P 500 Index. I know to many professional traders (like Conrad) this way seem very little, but I am just doing trading in my spare time as a hobby…so not bad lah.

The importnat lesson I want to share wth everyone is that business and the market environment is only RISKY when you do not know what to do about it. To people with no training in investing and business, everything will seem like challenges and problems. However, when you invest in your financial education, then every challenge, every problem and every downturn will be a great opportunity to make even more money. When you know what you are doing, there is NO RISK only RETURNS $$$$.