I know you’re probably tired of hearing — or reading — the same old cliches about this market. About how this is a “black swan” event or that we’re living in “unprecedented” times. The same goes for people saying that stocks have dropped at a “historic pace.” Or that we are likely in a recession. You get the idea…

Nearly everywhere you turn it’s doom and gloom.

The first three months of 2020 are in the books, and the news isn’t good… New unemployment claims are at record highs, GDP will likely contract at a double-digit clip. And the Dow Jones Industrial Average lost 22% during the quarter, creating a new record for the index’s worst first quarter ever.

One thing to note is that while it was the index’s worst first quarter ever, it’s not the worst quarter ever. That prize goes to the final quarter of 1987, which saw a 26% loss.

In less than a month, my Maximum Profit system we went from heavily allocated to equities to 100% cash. As I explained earlier, I’m glad we had the system working for us, since it helped us avoid some painful losses. But make no mistake, we still booked a few losers. Thankfully, we have plenty of firepower to start dipping our toe back in the water.

We’ve done just that, first by adding a stock two weeks ago, and then again this week.

But during turbulent times like these, it’s a good idea to keep our investment rules close by. The main one, as I always say, is cutting losers short. Talk to any successful trader, and the one thing they’ll tell you that’s been key to their success is managing their risk. A big part of that is not being afraid of cutting a loser short.

You see, when it comes to successful trading it’s all about capital preservation. If you lose too much capital because you held onto one or two losers too long, this can end up blowing up your account. This puts you out of the fight. Simple as that.

You have to live to fight another day. So let’s recap four investment rules that will not only help you during times like this, but will also help you become a better investor overall.

Investment Rule #1: Let Winners Run — you can trim winning positions to “take money off the table” or bring them back to their original portfolio weighting. But don’t cut a winner short just to prove to yourself that you were right.

Investment Rule #2: Cut Losers Short — sell positions that simply aren’t working. If the investment isn’t working in a rising market, it likely won’t work in a declining market.

Investment Rule #3: Keep Your Emotions In Check — don’t get swept up in the short-term movements of the market or allow the media and Wall Street to bully you into buying or selling your investment. Think for yourself.

Investment Rule #4: Be Patient — as with investment rule #3, you should never feel rushed to make an investment. There’s nothing wrong with sitting on cash until a good deal that you like comes along. As Warren Buffett says, “What’s nice about investing is you don’t have to swing at pitches… You can wait for the pitch you want.”

Action To Take

Remember, you are going to take some losses when you’re in the market. It’s just a matter of how big of loss you’ll suffer before you throw in the towel. That’s why it’s so vital to have a system or rules in place before you even hit that “buy” button. These rules should help you in any market, no matter what sector, and whether you’re a trader or long-term investor.

Another thing to do during uncertain times like this is to increase your exposure to gold. It’s the classic safe haven, acting not only as an important hedge — but potentially rewarding investors with serious gains. My colleague Dr. Stephen Leeb has a special report on one of the most interesting gold finds of his career. You can check it out here.