It’s March, which has historically been one of the best months for the stock market. This week the indexes reached their highest point since 2018.

But what do you do AFTER the market hits all-time highs? After the euphoria has run its course and you’re left wondering what’s next?

Often this is when you’ll hear whispers of a market correction coming up.

At the beginning of April, you’ll hear the familiar refrain: “sell in May and go away”.

This Wall Street axiom refers to the Wall Street traders heading off to the Hamptons after Memorial Day kicks off the summer vacation season. The thinking is that volume dries up for stocks and so does any momentum until the return to normalcy after Labor Day in September.

But what if that market correction comes earlier this year? Or what if it comes in September when the elections of 2024 begin to weigh heavily on the market?

The truth is…

Markets HATE uncertainty more than bad news. Bad news is tangible, uncertainty is not.

So, when uncertainty creeps in, can you handle a 20% market correction and still have dry powder to buy high-quality shares that will be marked down 20% to 50%? If not, here’s how you can be ready.

How to prepare for a market correction

First, look at your portfolio – Are you overweight in any one sector or stock? Have you switched as much as you can from stocks to LEAPS (long-term plays)? If not, then why not?

If you have positions you’re pretty sure you won’t hold for more than a year or two and there are LEAPS available, then you should consider a swap to pull cash off the table and keep the upside.

Here’s my portfolio checklist for potential market corrections:

1. Am I properly allocated?
2. If I’m holding a stock and not a LEAP security, do I have an adequate stop-loss in place?
3. Can I switch from a stock to a LEAP security to pull cash off the table?
4. Is the reason for owning the stock on Friday still the same today? If so, then I should not be panicking, but instead, I should start thinking about adding to my position.
5. Am I position sized properly?
6. Do I have any downside protection?
7. Has something materially changed in the economy – either from the fiscal side or the monetary side?
8. Do the companies I own have good fundamentals?

If I can answer each question with a “yes”, then I’m better prepared for the inevitability of a market correction, whether that begins next week, next month or next year.

This is not a complete list. But it’s a start and something you should consider. If you aren’t prepared, you risk falling into panic, which IS a strategy, but a poor one.

YOUR ACTION PLAN

If you’re still unsure how to profit from this type of advice – I recommend joining The War Room. We track our portfolios in real-time, all day long, so you’ll be able to follow along as we adjust to these market ups and downs.

Click here join us in the War Room.

FUN FACT FRIDAY

I’ll buy you a beer if you vote for me: A lot of cities used to close all the bars on election day. Political corruption used to be more retail. You could buy people drinks, and thus buy their votes.