To The Moon

Charlie Munger’s stark warning rings true: if a 50% market drop every few decades shakes your resolve, you’re not cut out for the shareholder life—and mediocre returns await. History backs him up, with the S&P 500 plunging 49% in 2008 and 34% in 2020, yet rebounding to 6,600 today. Munger’s philosophy demands equanimity amid chaos, turning dips into opportunities. Are you ready for the next big fall? How do past crashes shape today’s strategy? Let’s unpack the lessons, analyze current risks, and build a plan to thrive when markets tumble.

Market Crashes: A Century of Volatility

Munger’s insight draws from real cycles:

• Dot-Com Bust (2000): S&P 500 fell 49% from 1,527 to 777, recovering in 5 years to 1,400.

• Financial Crisis (2008): A 57% drop from 1,565 to 676, with a 6-year climb back to 2,000.

• COVID Crash (2020): Down 34% from 3,386 to 2,237, rebounding in 6 months to 3,800.

• Current Resilience: At 6,600, up 24% YTD, the market’s near all-time highs, but volatility looms.

• Market Sentiment: Posts found on X note “bullish momentum” but warn “overvaluation at 21.5x P/E.”

• Historical Pattern: A 50%+ decline hits every 20-30 years, with the next due by 2030-2040.

Crashes are inevitable—preparedness is key.

Today’s Risks: What Could Trigger the Next Drop?

The market teeters on several edges:

• Interest Rates: Fed’s 3.9% 10-year yield hints at tightening, pressuring stocks with $1.5 trillion in corporate debt due in 2026.

• Geopolitical Tensions: Trump’s Russia sanctions and China tariffs could disrupt $270 billion in trade, per recent moves.

• Tech Overreach: Nasdaq at 22,200, up 30% YTD, with Tesla at $300 and Nvidia at $135 showing P/E ratios above 35x.

• Inflation Pulse: CPI at 2.9% edges toward 3.5%, risking Fed hikes if oil hits $85.

• Sentiment Check: X posts highlight “tech bubble fears” alongside “energy stability.”

• Economic Signals: U.S. GDP growth at 2.8% masks a 4% manufacturing slowdown.

The next crash could be brewing.

Sector Resilience: Who Stands Strong?

Some sectors weather storms better:

• Energy: ExxonMobil at $122, up 15% YTD, thrives on $74.20 oil, with a 12x P/E.

• Defence: Lockheed Martin at $580, up 20% YTD, gains on NATO orders, with an 18x P/E.

• Consumer Staples: Nestlé at $112, up 8% YTD, offers stability with a 17x P/E.

• Tech Vulnerabilities: Apple at $250, up 22% YTD, faces a 28x P/E, risking a 20% drop.

• Financials: JPMorgan at $220, up 12% YTD, holds at 13x P/E amid rate shifts.

• Sentiment Check: X praises “staples and energy” but flags “tech pullback.”

Diversification softens the blow.

Investment Outlook: Prepare for the Inevitable

The road ahead balances opportunity and caution:

• Bull Case: S&P 500 could hit 7,000 (6% upside) by year-end if $6,300 holds, with 2026 at 7,500 (13.6%) on growth.

• Bear Case: A 50% crash to 3,300 risks if rates hit 4.5% or geopolitics escalate, with 2,800 as a floor.

• Technical View: RSI at 72 and MACD bullish suggest overextension, but support at 6,400 remains.

• Long-Term View: A 10-year horizon could see 9,000 (36% upside) by 2035, per 7% CAGR, barring shocks.

• Sentiment Check: X leans “long-term optimism” but warns “short-term correction.”

Equanimity pays off.

Trading Opportunities: Turn Crashes into Gains

Strategic moves to consider:

• ExxonMobil Energy: Buy at $122, target $135, stop at $115. A 10.7% gain on stability.

• Lockheed Martin Defense: Buy at $580, target $620, stop at $560. A 6.9% rise on orders.

• Nestlé Staples: Buy at $112, target $120, stop at $108. A 7.1% upside on demand.

• JPMorgan Financial: Buy at $220, target $240, stop at $210. A 9.1% lift on rates.

• Options Edge: Buy $135 ExxonMobil calls or $620 Lockheed calls (March 2026 expiry) for 100-130% gains on a 10% move.

• Cash Reserve: Hold 20% cash to buy dips at 6,000 or below.

Crashes are buying opportunities.

Trading Strategies: Weather the Storm

Short-Term Plays

• ExxonMobil Pop: Buy at $122, sell at $125, stop at $119. A 2.5% scalp on volume.

• Lockheed Lift: Buy at $580, target $585, stop at $575. A 0.9% rise on news.

• Nestlé Bump: Buy at $112, target $114, stop at $110. A 1.8% gain on stability.

• Bearish Guard: Buy S&P 500 puts at 6,600, target 6,200, stop at 6,650. A 6.1% win if crash hits.

• Profit Lock: Sell Nasdaq at 22,200, target 21,500, stop at 22,300. A 3.2% buffer.

Long-Term Investments

• Hold ExxonMobil: Buy at $122, target $150 by 2027, for 23% upside. Stop at $110.

• Hold Lockheed: Buy at $580, target $700, for 20.7% upside on defense. Stop at $550.

• Value Anchor: Buy Coca-Cola at $65, target $75, for 15.4% upside. Stop at $60.

• Defensive Hold: Buy Procter & Gamble at $180, target $200, for 11.1% upside. Stop at $170.

Hedge Strategies

• VIXY ETF: Buy at $14.40, target $16, stop at $13.40, to hedge volatility.

• Gold (GLD): Buy at $205, target $215, stop at $200, as a buffer.

• T-Bond Futures: Buy at 108, target 110, stop at 106, on rate fears.

My Investment Plan: Embracing Munger’s Mindset

I’m gearing up for the next crash. I’ll buy ExxonMobil at $122, targeting $135, with a $115 stop, on energy strength. I’ll add Lockheed Martin at $580, aiming for $620, with a $560 stop, on defense growth. I’ll include Nestlé at $112, targeting $120, with a $108 stop, and JPMorgan at $220, targeting $240, with a $210 stop. For stability, I’ll buy Coca-Cola at $65, targeting $70, with a $60 stop. I’ll hedge with VIXY at $14.40, targeting $15.5, and hold 20% cash to scoop stocks at 6,000. I’ll track Fed moves and X sentiment closely.

Key Metrics

The Bigger Picture

On September 13, 2025, the S&P 500 at 6,600, up 24% YTD, masks risks of a 50% crash Munger predicts every 20-30 years. Past drops like 2008’s 57% and 2020’s 34% show recovery, with 6,400 support and a 7,000 target (6%) if bullish. A 50% fall to 3,300 looms if rates hit 4.5% or geopolitics flare. Energy at $122, defense at $580, and staples at $112 offer resilience, while tech’s 35x P/E signals caution. Munger’s lesson is clear—stay calm, buy dips, and win big.

Can you handle a 50% crash? Share your strategy! 💡

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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