Source: AZ Quotes
Short answer: YES!
Long answer: Refer to everything we are writing below 😉
Fears surrounding COVID-19 and oil war between Russia and Saudi Arabia rocked the stock market this week.
Major indexes around the world have fallen by 20% or more.
The S&P500 peaked at 3,393.52 on 23rd Feb 2020.
However, it ended this week at 2,711.02, down 20.1%, with the lowest point at 2,492.37 (13th Mar 2020), a 26.5% drop from its peak.
Source: Yahoo Finance
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The mantra of the stock market: Buy Low, Sell High
Fear is high now, with everyone worrying about how will the global economy fare under the impact of COVID-19.
Many of my friends whom I know have saved up money to invest when the market drops are now not investing in the market simply because they fear that the market will go lower.
That is a fair point.
But what is weird to me is, many of the stocks they had previously set a buying price target for, even though the stock price has fallen below that price target and there are no significant changes on the fundamentals of the business, many are still not willing to invest their money, for fear that COVID-19 would dramatically change their business fundamentals.
To me, that just made no sense.
If the stock you were previously looking at has hit the buying price target you had set, and you identified that the business fundamentals of that stock have not changed, INVEST!
This is the fear you have been waiting for!
So what else are you waiting for?
You trying to time the market?
Well, here’s a tip: don’t bother
Most of us suck at market timing, it’s a statistically proven fact.
Besides, when you invest, you are supposed to be in it for the long-term, and over that long-term, you are bound to face some volatility.
So if you bought after the stock price dropped 20%, if it drops further, that’s just part of the volatility.
If you would invest in that stock after it suddenly dropped 20% without COVID-19, why would you not do it now?
Particularly
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If you are a normal human you will suck at market timing. Your friends should simply DCA every quarter or every month, bull market or bear market, oversold or overbought, and not think about it. Focus on their jobs, salary & employability.
ReplyDeleteVery successful longterm investors that use market timing like Buffett actually have certain human traits that are not normal or not very likeable to the rest of us e.g. loners, socially awkward, low EQ, hard hearted, emotionless, not even helping father/mother/siblings in-need etc etc.
Buffett was like that in his early years up to middle age. He only started to mellow down in his 50s & 60s.