To The Moon

The last few days have felt different on the stock market.

Questions are being asked about former rocket ships (including Rocket Lab), Anthropic’s revenue growth is slowing, neocloud yields are rising, companies are cutting back on AI spending, inflation is stubbornly high, and it’s possible the semiconductor and AI stocks that have held up the entire market in 2026 could come crashing down.

At least, that’s the narrative.

A few days doesn’t make a trend, but if you’ve felt uneasy the last few days, it’s time to remind ourselves how to survive — and thrive — in a bear market. $SPDR S&P 500 ETF Trust(SPY)$ $Invesco QQQ(QQQ)$

Do Your Research Ahead of Time!

It’s almost impossible to think clearly in a falling market.

On Friday morning, I checked the Asymmetric Portfolio, and it was up about 1% early in trading.

By 2:15 p.m. CT, it was down 3.5% on the day.

Had anything changed with the companies I own?

No!

When stocks are rising, it’s easy to have confirmation bias. A sentiment I see a lot when a stock is going up is:

“The market finally gets it.”

But when a stock is falling, is the market wrong, or was our analysis wrong?

It can be hard to decipher, but I think if you’ve built a thesis and are thinking long-term about a company’s direction ahead of a falling market, you’re 10 steps ahead of the investors trading on emotion (which is most people, TBH).

Balance Sheets Matter

How do you survive a decline in your business?

Have cash to weather the storm.

Don’t have debt that becomes a weight dragging you down.

It seems simple, but leverage (debt) is often good when the market is going up because it leverages the returns investors get. What we often forget in good times is that the opposite is also true, and leverage kills companies in bad times.

For the Asymmetric Portfolio, balance sheets are stronger than you might think:

• 15 of the 24 stocks in the Asymmetric Portfolio have a net cash position (cash minus debt).

• $Walt Disney(DIS)$ ( ▼ 0.08% ) and $Uber(UBER)$ ( ▼ 1.29% ) are the only two with significant debt, and they have solid, predictable cash flow businesses.

If conditions get rough, a few Asymmetric Portfolio stocks will run into challenges. Most will be able to be aggressive in taking market share.

Cash Flow Matters

Related to the balance sheet is cash flow. If a company has cash flow today, a recession in the economy may reduce cash flow or even force it negative, but the starting spot is an advantageous one. Starting with negative cash flow and going to more negative cash flow is problematic.

• 20 of 24 stocks in the Asymmetric Portfolio have positive free cash flow.

• The 4 companies with negative free cash flow account for just 8.5% of the portfolio.

• 12 of 24 stocks have a price to forward free cash flow estimates of under 20x.

Cash flow is always good, but it becomes a key to survival and ultimately thriving in a downturn.

Valuation Matters

For the last 15 years, the market has been in a multiple expansion environment. I like this $S&P 500(.SPX)$ P/E multiple chart that shows the multiple near its all-time high outside of recessions (when the E drops and P/E ratio goes up). This was like a huge tailwind behind the market overall.

To give some examples, $NVIDIA(NVDA)$ ’s price-to-sales multiple alone has a compound annual growth rate of 16.6% since late 2014.

Think that’s cherry picking? What about $Wal-Mart(WMT)$ ’s P/S and P/E multiples compounding at double-digits for more than a decade?

Simply a drop to 2015 multiples would drive the stocks down over 70%!

I often talk about multiple expansion being a tailwind for Asymmetric stocks, and that’s why I like buying low multiples. But look across the market, and a lot of multiples are unsustainably high…

Don’t Try to Time the Bottom!

Over the last 16 years, drawdowns have been short and “easy” buying opportunities. Quite literally, buying any dip was a winning proposition within months.

But that’s not always the case, which I’ll get to in a moment.

I always try to be opportunistic, but realize that stocks can always go lower. I am at the point in my life where I’m constantly adding to the market, so I’ll keep buying all the way down and all the way back up.

This is one of the reasons I’ve designed the Asymmetric Portfolio for monthly additions on the same day each month.

I’m showing that I’m not trying to time the market.

I’m not day trading.

I’m just buying at the market price once a month.

Your situation may be different. It may be the same. But remember in a bear market:

If you blow everything you’ve got thinking the bottom is in, and the market drops another 50%…there’s no more buying the dip!

We May Be Here a While

As I just mentioned, every dip in the past 16 years has been a buying opportunity. And given a long enough timeframe, that has always been the case (kind of) if you’re willing to hold for decades.

But the drawdowns that create real scars for investors last a lot longer than a few months.

The dot-com crash started early in 2000, and buying in June 2000 wasn’t the bottom. Neither was December 2000. No, the market didn’t bottom until spring of 2003…three years later!

Fast forward a few years, and I remember buying the dip in 2007.

And the dip in 2008.

And the next dippity dip in 2008.

And the “this has to be about over” dip in 2009.

But it was about 18 months from peak to bottom and another four years before the market recovered to previous highs.

If you weren’t investing in 2000 or 2008, this will be a foreign feeling. A bear market can take a while. It’s not a 3-month drop, and everything is back to normal again.

If the AI bubble does pop, jobs will be lost. Homes will be repossessed. Businesses will go bankrupt.

It’s not fun.

And buying those big drawdowns is where the money is made.

When In Doubt, Do Nothing!

If you’re paralyzed by what’s going on in a downturn, that’s OK if you’ve followed the rules I’ve set out so far.

Buying $Amazon.com(AMZN)$ ( ▼ 1.87% ) at the peak in 2000 felt terrible when the stock dropped 94%, but you’d still be wildly wealthy just holding on.

This is why a starting point for investing is owning companies that can survive — and thrive — in a downturn. Those that make it out the other side are often phenomenal investments.

Our emotions are often our biggest obstacle in a bear market, so keeping your head clear and leaning on the research done in calmer times is a great default. And when in doubt…do nothing.

Don’t panic.

Bear markets eventually end.

Surviving is half the battle.

As for me, I’ll be consistently buying and looking for opportunities in any market. Volatility is expected, and in time, that will work to my favor.

But we’re all different, and understanding your own emotions if the market drops 50% is a personal journey.

I’ve learned that my “superpower” as an investor is that I don’t panic.

I am more comfortable in a downturn because I see value in the work I’ve done ahead of time.

If a bear market comes, I’m ready!

Markets are always moving - and sometimes, the best move is knowing what works for you.

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