Investing in challenging times
If you are a younger investor seeing the market right now, you are likely thinking one thing. I wish I invested in Meta, Tesla, and Warner Brothers; the list of investments you could have made money on is countless. When you see gains like this in the market, especially when the market is presenting double-digit returns from certain companies, it is tempting to change strategy or question yourself, but don’t. Trying to time the market is hard and takes a lot of skill, knowledge, time, and luck, so unless you are interested in day trading, I would stay away from it. Day trading focuses on short-term trades to capitalize on market fluctuations. Day trading comes with its risks and is not something I encourage.
Investing is not about short-term gains. Just because you see companies experiencing a rebound does not mean they are sound investments. Many companies are still off from their recent highs, and a dead cat bounce can cost you money. The fundamentals still matter. When you look at investments evaluate P/E, cash on hand, and market cap, and remember to stay diversified for every Nvidia that saw a rise in value, you had an Intel that continued to slide down. I think the best thing for new investors is to block out the noise. I suggest passive index funds, which not only on average outperform actively managed ones but also have lower costs. New investors should also use the strategy of dollar cost averaging or splitting up purchases over time to limit risk and volatility in investing. Remember investing has risks, and you should be as informed about what you are investing in. The goal is to build wealth or supplement your income, not to gamble.
The market goes up and down, and if you are around my age, you have mostly only seen a rising stock market things are changing. Just picking any stock won’t cut it anymore, and you need to be a more savvy investor. Something else we haven’t seen is an actual return on deposits. Bank CDs and bonds corporate, municipal, US treasury, and so on have rates that are competitive to those of stocks! (don’t forget those deposits unlike other assets protect your initial investment) This is worth looking at for more risk-averse investors. I want to help you get there and will continue to write articles detailing how you can build your wealth. Keep reading my articles and reach out to me here or on my social media for more advice, but I am not a financial planner, so always consult yours.