With the stock market riding a rollercoaster sufficient to make anyone nauseous – the question is to buy or not to buy?
Despite a host of welcome government pledges and initiatives, there is simply no clarity on the long-term impact or the duration of this virulent challenge.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. No one likes to see the value of their portfolio fall significantly in a short space of time.
Simply put, this level of uncertainty isn’t supportive of stock prices in the short term. For stock prices to return to normal, we need clear indications that things are going to quickly improve. In fact the message from politicians is clear, that things will get worse before they get better.
This means volatility in the near term and erratic fluctuations tied to good news and bad news. It’s likely that there will be more days of 5%+ moves for the major indices. And the volatility is going to sit with us.
But this needn’t be all bad news. Rather, a prolonged bear market following a stock market crash, provides more opportunities for investors to buy quality stocks at attractive prices. So, there will be plenty more opportunities to get into the market.
Here’s some steps to keep you calm in the eye of the storm:
- Don’t simply react to erratic moves in the stock market. We shouldn’t be chasing the market back on its way up, through fear of missing out.
- Over the long term, it’s important to invest in companies that you actually believe in. Don’t just buy something that has dropped its value in a short space of time.
- Identify stocks that look like they could do well in the long term, without rushing to invest. Stock prices are unlikely to just shoot back up to where they were before the stock market crash, so be patient and don’t invest until you are ready.
- Take advantage of time on your hands and watch the rise and fall of the market and research the companies you like the look of.
- Every stock market crash reveals buying opportunities. Calm your nerves, try buying into only the biggest companies.