DJIA lost 2997 points, 12% loss in a day…
Fed rate dropped to 0% and yet deemed to be insufficient...
Horror stories of how COVID-19 is going to severely impact the world
We have all heard the lockdown in many cities across the world.
Everybody is scrambling to stop the virus with new measures.
If you are unfamiliar with exponential numbers, this is the time to see it in full force.
That is also why "COMPOUNDING IS THE EIGHTH WONDER" (Albert Einstein). That's investment on exponential.
Market crash of Sept 11 2001
11 sep 2001, markets came down sharply after the plane crash on world trade centre.
The next few weeks was jittery.... Why?
Everyone was guessing where the NEXT ATTACK would be coming from. Could it be a virus letter or another plane hijack.
Similar in some ways to now. Where is the next country to show an exponential spread? USA? Malaysia?
From my memory of 2001, there were more attempts to sabotage but the "bad guys" were stopped in time. We upped the surveillance everywhere. We got used to the new risk levels, learned how to survive and actually started to get bogged down by new problems".
Now, we can't even remember the trauma of 9/11 anymore.
Shouldn't you wait for the economy to be doing better?
If you have investments and thinking to sell,
please see the sharing below
If you haven't invested you may be thinking... shouldn't we wait for the economy to be doing well, sure its time to invest?
Everyone wants to wait for the markets to recover first then start to invest.
As shared above, it's more often then not "We get used to the new risk levels, learned how to survive and actually get bogged down by new problems" cycle.
Hence, there's NEVER a "confirmed green light NOR a definitive "recovery sign". I
t is intuitive to hope for it then go in but really... it DOES NOT EXIST. I've previous youtube videos on the timeline of SARS which I'd leave in comments below.
Markets move first. It looks past an event. Then news and media justifies to the masses.
We will figure a way to cope with Covid-19.
Market crash from 6 OCT 2008 - Bad news was always around
“This is markets in pure panic mode. The financial system is seizing up,” said Peter Dixon, strategist atCommerzbank.
“Another Monday, another banking crisis,” said Manoj Ladwa, senior trader at City firm ETX Capital.
“Just when the market thinks it has found a base level, there’s another jolt to the system and we lose another 200 points off the FTSE 100.
Black Mondays used to be a once-a-decade event – now they’re coming along more regularly than a London bus.”
Even if you buy after bad news, more bad news can come...
From research indeed, the index looked like it hit a potential market base level around that period.
After all, GFC had been 10months of bear and >30% decline.
Experts have been suggesting that the market is cheap.
If you reacted to the news and wanted bought some to trade up for the short term, bad news…
More depressing news in Dec2018.
1) The only thriving part of the credit markets was government debt. Investors desperate for safety poured money into Treasury issues, particularly short-term bills.
The yield on the three month bill plunged to zero
2) Wall Street’s crash in 2008 didn’t come in one day like the famous 22.6 percent plunge of Oct. 26, 1987.
In many ways it was more nightmarish than Black Monday because there wasn’t a quick end to the selling and record volatility.
3) For the near future, economists and market experts predict more bad news…
Don't listen to news too much and look long term
Low can always go lower...
News will always highlight the crashes and NEVER ENDING horror stories.
But if stock valuations seen today are cheap, it will lead to positive results over the next decade.
There will always be a recovery phase for the future unless you believe in doomsday.
Asian Equities and a dollar cost averaging strategy
Here is a quick comparison to show good valuations in ASIA Equities.
It is cheaper than S&P 500 and not stretched by P/B or 10y average PE measurements.
A possible strategy is to do dollar cost averaging.
It is simply to buy regular amounts in and don't worry about markets.
I've this tutorial for you below in the video.
Conclusions
It is better to give up the idea of finding a market bottom because low can always go lower.
Bad news has always been around and may persist.
Avoid losses totally is not an investment goal and neither should you wait for "all clear" because it doesn't happen.
Having a plan like dollar cost averaging and stick to it.
To read more on being a better investor,