Tag: market crash

  • Time To Buy Stocks Is Right Now!

    Time To Buy Stocks Is Right Now!

    Time To Buy Stocks Is Right Now!
    The advantage of buying stocks right now is that you can get more for your money. If you are young, the more you do with your money now, the more it will be able to grow throughout your lifetime.

    By Guy Avtalyon

    Yes, this is time to buy stocks.  That would be a short answer but here is why this is a time to buy stocks. 

    Stock prices are changing violently because of the economic slowdown caused by a new coronavirus outbreak. So, the volatility makes it especially challenging to answer this question because it may vary on a daily basis. Maybe the most critical part of any investment decision is the stock valuation on which we base our decisions, should we buy or sell the stock. Moreover, that can tell us a lot about other investors’ feelings toward some particular stock. So, you need an explanation of our observation that this is time to buy stocks.

    Here are some real examples but we have to go back in the old days. 

    The historical overview

    It was the year 1974.

    In the period of 1973-1974 bear market ultimately bottomed. It marked a 43% decline for the Dow Jones in a time frame of two years or even less. This bear market ended December 6, 1974, when the Dow Jones hit 577.60. The large sell-off caused a lot of damage to the U.S. market and it took approximately 20 years to entirely recover. But, at the same time, every investor who had guts to buy stocks then, had great returns later.

    The second occasion was in 1982. 

    The Bear Market of 1982. The market had been falling for almost one year and two months, actually exactly 451 days. In just one day, it was February 22, the S&P 500 Index was down for almost 21%. Inflation in the US was at 13.58% but also, it was a rough year for the rest of the world. But some investors were smart and made their life-time investment by buying stocks.

    The next was the stock market crash of 1987. 

    This market crash originally came from the US but had a great impact on the global economy. In October that year, DJIA fell by 22,6%. It was a well-known Black Monday. Until then, Dow Jones never had such a drop in one day. And as in previous cases, some investors made smart choices,  and bought stocks rather than sell them and it was a very profitable decision for them.

    Horrible 2008/09

    The most recent event, before 2020, happened in 2008 and 2009. This bear market actually lasted from October 9, 2007, to March 9, 2009. 

    The S&P 500 Index lost about 50% of its value, and the DJIA fell 777.68 points in intraday trading. It was the largest drop point fall until this year’s market crash. Also, some were smarter than others and they bought the stocks instead of selling them. In other words, during the market’s crashes during history, the most successful investors were buying.

    What do these events have in common?

    They were all connected to some kind of crisis. And each market situation was characterized by capitulation. 

    The stock market capitulation means giving up. It is the point when investors are giving up on attempting to recover lost gains caused by falling stock prices. For example, a stock you own has dropped by 20%. You have two alternatives: to wait it out with hope the stock starts to appreciate again, and the other solution is to compensate for your loss by selling the stock. When most of the investors choose to wait it out, the stock price will probably continue almost stable. But if most of the investors choose to give up on the stock, the stock price will decrease further and sharply. When this event is relevant to the entire market, it is a market capitulation.

    What else is in common for these market crashes? The most profitable investors were buying stocks. It looks like selling wasn’t the right option for them.

    So, we can easily conclude that time to buy stocks is right now. This is an amazing chance to buy stocks because they are cheap now.

    When is the right time to buy stocks?

    The truth is that almost all investors are scared. The possibility of losing all capital is enormous and some of them are starting to get out of the market. Everyday volatility, stock prices changes in milliseconds, have a great influence on investors’ emotions.

    The markets’ crashes, we mentioned above, weren’t quite severe as this one is. This bear market marked a 20% drop from the recent market highs. So, despite the fact that this drop is so sharp, it could be a good time to buy stocks.

    Yes, we know that investing in this time may sound strange and nonsense for someone. But, at the same time, if you are seeking long-term investment it could be the best time. For example, you can buy some blue-chips at a very favorable price. Such are, for instance, Walt Disney, or Coca-Cola. Just follow the KIS rule and look at the most prominent. These companies and similar survived through previous market crashes and came out stronger providing great returns.

    You can create real wealth in stocks now. Just don’t watch from the sideline. React and do it now.

    Is this time good to buy stocks?

    Stop dreaming and guessing. Listen to good advice only. Have an investing plan.
    Start investing with an edge, that will give you an advantage over other investors. Buy the stocks that were the best players last year. 

    Watch what the world’s billionaires do, the path they made. Allow them to show you what stock to buy. They are strong enough to fight for their investments, but at the same time, they will increase the value of yours. 

    It isn’t time yet to estimate the accurate impact the coronavirus pandemic will have on the companies. The results will differ by company. Some will manage better than others, but that’s how things go. What we can do is to find the company built to last. Take a look at their revenues for the past several years or at least for the last one. Some did great. So buy its stock at a discount. 

    You have to know that this pandemic will have influence over the next several years. Just don’t panic. This is not the time for that. This is a time to buy stocks if you have some extra money that you’ll not need in the coming years. Just invest it in brands. This lesson came from history. 

    Investing is more available than ever. That means you don’t have to rely on some difficult strategy to start earning money. You can buy options, you have help from free trading platforms, apps to create an investment plan that matches your goals, and risk tolerance. You are investing for the long haul. Ignore the panic and understand why it is the right time to buy stocks. Set clear goals, and recognize your limits. Keep in mind, investing in stocks is one of the easiest ways to put your money to work.

  • Coronavirus Is Crashing The Global Markets

    Coronavirus Is Crashing The Global Markets

    Coronavirus Is Crashing The Global Markets
    COVID-19 is crashing the global markets but history has shown that the markets bounce back again and again over time.

    Coronavirus is crashing the global markets but investors are returning to China. It looks like the appetite for Chinese shares is rising again. For example, Pinebridge Investments from New York. According to CNBC this firm “had total assets under management of $101.3 billion as of the end of last year, including $25.5 billion in stocks and $64.3 billion in fixed income.”

    Despite the fact that the novel coronavirus is crashing the global markets fund managers start buying Chinese assets again. And all Asian markets rise moderately.

    Major markets in Asia were up nearly 1% yesterday (Tuesday, March, 30) and Hong Kong and South Korean shares rose about 1.5%.  

    Fund managers have recently boosted China A-shares. It was “a small single-digit” starting position and now is “a low double-digit weighting.”  So we can conclude the Far East, led by China, is already showing recovery.

    China President Xi Jinping presented strong growth signals. Goldman Sachs reported the Chinese policy is concentrating on demand. Also, the government’s concern is to sustain employment, financial markets, trade, and foreign capital. 

    Russian financial market

    On the other hand, the Russian economy has been shaken by the coronavirus pandemic. The main impact on the Russian economy came from the breakdown of the production pact between Russia and Saudi Arabia. This was a shock for traders all over the world. The consequence was intense volatility on the Russian stock markets which dropped around 20%. The value of the ruble also is down around 20% from the beginning of this year.

    The price of oil futures is rising 

    Coronavirus is crashing the global markets but recently the analysts showed some optimism toward financial markets. 

    Oil futures surged on Tuesday after dropping to their lowest levels since 2002. Maybe the oil prices allow the best check of how investors anticipate the economy to function. The rising price of oil futures is probably a weak sign because on the other side we have gold as a standard safe-haven investment but the price of gold dropped significantly in trading on March 30. 

    When coronavirus is crashing the global markets it looks like there is no safe place to put money. Another safe place was longer-term U.S. Treasury bonds, also known as T- bills, but it dropped also.

    Investors’ worries have not gone away yet. The stock market is still volatile. The VIX index is still at historically high levels. It fell a bit two days ago but this level still shows an extreme stock market volatility.

    Coronavirus is crashing the global markets – what investors should do?

    Here is what investors should do while the coronavirus is crashing the global markets. First of all, every single investor must understand the value of the overall portfolios is lower. But it is a paper loss, why would you transfer it in true loss? That is exactly what you would do in case you try to sell. So, sit back and do nothing. Don’t check your portfolio every single day. Put away your desktop or laptop computer and turn off notifications on your phone. The time for your reaction has passed anyway. You can’t do anything now. Just try to stay calm and avoid stress. As a serious investor, you should be prepared for market volatility. Even for this extreme one, that we have now. 

    Market volatility is a good time to start investing

    If you can’t sit in peace, start small and not frequently. For example, buy a small chunk of stock per week. And repeat it until you buy what you want. Diversify your investments across major asset classes, don’t buy from the single one. 

    This period when the coronavirus is crashing the global markets is a good time to enter the market. The stock prices are low, you don’t need too much money to buy them and you can start with small parts buying from time to time. This is a great time to estimate your personal risk tolerance. But you have to follow some rules.

    The rules to follow when the markets are down

    As we pointed before, invest gradually. This means you have to invest a predetermined amount into the same asset over a long time. In this way, you’ll be able to buy more chunks at lower prices (we suppose you want to buy stocks when the price is low, that’s the rule of investing – buy low, sell high, right?) Thus this method will allow you to buy less when the price is high. So, even if you are a total novice in the stock market by doing this you’ll implement one of the most efficient strategies – a dollar-cost averaging. 

    When you estimate where to invest try to find and pick the stock for long-term investment. That’s the reason you shouldn’t start investing if you don’t have saved and put aside cash equal to at least three months’ salary. You will need that money for rainy days. You can invest the rest of your money. 

    Compound interest and diversification

    Keep in mind the advantage of compound interest. That’s when you earn interest on the interest you receive, but you must have an investing plan and stick to it. And the mother of all investments, diversify.

    Diversification will give you more exposure to a wide range of stocks.

    Remember, the current market drop can give you a very good opportunity for young and new investors who can play for a long time. All researches highlighted the young people who invested systematically during market corrections and during the market downturns done better than the others who withdrew. 

    The existing investors should hold their investments tight. Remember, this period when coronavirus is crashing the global markets is just a stress test. Nothing more. Don’t let your emotions lead you, don’t sell your shares in a panic. Sell only if you have some urgent need for cash.

    It’s impossible to pick the market bottom. Resist those thoughts. If you want to trade the stocks you can learn more in the “Two Fold Formula” book. Also, you can check it with our preferred trading platform.

    Bottom line

    Coronavirus is crashing the global markets, that’s the reaction of the market to the spreading of a pandemic. From some point of view, it was expected. A virus outbreak can cause many problems. From day-to-day individual activity to global productivity. This new COVID-19 virus changes the economic outputs since it is progressing in almost every part of the globe. 

    The investors are reasonably worried. The broad disruption to global trade could have a large influence on global growth. Along with these fears in the financial markets, the fears for individual safety is due to the threat of the virus itself. This level of fear may cause even the most rational investors to play by emotions. As negative news appeared the investors with lower risk tolerance started to sell in panic. And as it was expected, they caused a market correction. Just keep in mind, the market corrections are normal even in a bull market. The market needs to neutralize bad behavior. For example, FOMO. But the market will move forward despite anything. The markets will bounce back again. Also, it will be more sustainable. It just needs some time to catch a breath.

  • Stock Market Is Going To Crash? Where Could You Put Your Money?

    Stock Market Is Going To Crash? Where Could You Put Your Money?

    Do you believe that the market will crash or you know? There is a big difference between what you believe and what you know.

    2 min read

    market crash

    Market crash or market not crash. If you truly believe the market is going to crash, there are a lot of sorts of places where you can put your money.

    You could buy gold or real estate or you could take an aggressive approach. And try to capitalize on stocks’  by loading up on investments designed to rise when the market falls or you could move it all into cash.
    But be honest.

    Do you really believe in such a scenario? Market, crash!

    There is a big difference between what you believe and what you know. Do you know that the market crash is close? When? Tomorrow? Next week?

    On the other hand, I can understand that someone can recognize market crash in this uproaring and uncertain times.

    We all remember, OK most of us, March 2009 and market crash.

    Everyone was extremely agitated about the falls in the stock market. And people were feared that the stock market might continue falling. Many people wanted to sell the holdings in his investment portfolio, move the proceeds to cash and sit out the market turbulence.

    And you know that emotions have an important influence on investor behavior and how do they make decisions.

    This can often lead to investors failing to capture the returns that are there for the taking. And as a result, suffering poor financial outcomes and according to some research, we are twice as sensitive to financial losses as we are to making gains.

    But is it so today?

    Is this the same situation? Will the market crash? Or it may not be. Think about it.

    The ones who like to predict disasters pointed to any numbers of reasons why they believe the market is headed to a crash.

    You have the choice to pick. From the growth-slowdown scare in China that sent stock prices down 12% in the summer of 2015; Brexit and the election of Donald Trump. Anything is supposed to be catalysts for a market rout. Obviously, some prediction of the market’s downfall is going to turn out to be right. But after the turnaround began in March 2009, it’s not as if investors knew the bear had run its course.

    While we believe we know where stocks are headed, we actually don’t.

    The same goes for market pros who may speculate and prognosticate (sometimes even provide valuable insights into what’s driving the market). 

    But they don’t really know what the financial markets are going to do in the near term. They don’t know will the market crash. 

    I don’t think it makes sense to shift your money around in an attempt to outguess the markets, whether that means going to cash to avoid a setback or moving to an investment you think will thrive while the market drop.
    That doesn’t mean you should sit back and do nothing.

    You can do the following things:

    The most important thing you want to confirm is your asset allocation or the percentage of your holdings that are invested in stocks.

    That will determine how your portfolio holds up if the market takes a major dive.

    Take this time to go over your holdings and tally up how much you have in stocks and how much in bonds and you’ll see how your portfolio is divided up between stocks, bonds, and cash.

    Second, figure out where your asset allocation should be.

    I’m sure you want a blend of stocks and bonds that will generate high enough returns so you can reach your financial goals but at the same time isn’t so risky that you’ll sell stocks in a panic during a major stock rout.

    Think back about how you handled past downturns or how you reacted when stocks began to dip and dive. You want to come as close as you can to a blend of stocks and bonds that you’ll be okay holding in a variety of market conditions. And then make all necessary adjustments.

    Then you feel you’ve got a portfolio that will provide sufficient gains during rising markets and enough protection during routes.

    You’ll be able to hang on until the eventual recovery, regardless of what’s going on in the market. The idea is to make sure your portfolio doesn’t become too aggressive during market upswings. Or too conservative when stocks take a hit.

    Making dramatic changes such as fleeing to cash or switching to different investments altogether, may be challenging at times when every news story or TV show you see seems to suggest that the market is on the edge of Armageddon.

    But you don’t want to let fear and emotions dictate your investing strategy and lead you to make impulsive decisions.

    Can I guarantee that this approach can provide you with the best results during the long – term? Of course not.
    This is just another  ”what would be if it were” scenario.

    Risk Disclosure (read carefully!)