Is this a good time to invest in the Stock Market
We have been getting so many messages about investing in the stock market during this time that we thought we should give you our take on the market at this time.
On investing in stocks right as the Bear market is taking hold might not such a smart idea; there was an overheating of the market with the Trump deregulation and tax breaks late 2018 and into 2019. This is a shock to the system and as seen in 2008 and 2009, large companies can go bankrupt in days leaving investors severely burned. The prices have dipped but haven’t reached the lowest price in the last 5 years except the oil stocks which are facing a different fight altogether.
Investing requires careful analysis of the company’s balance sheets to see how much debt they carry and if they had a contingency plan for these times. Of course, this information is not readily available as the companies disclose this information on a periodic basis.
The best course of action would be to invest for the long term; if prices are cheap to you as an investor, one can buy stocks of companies that fall in these categories.
Firms that have historically handled troubled times in the market.
Big tech firms such as Alphabet (Google), Facebook and Big Banks (JPM, Wells Fargo) have undergone big changes in recent years along with a lot of scrutiny and been able to stay afloat. Their leadership has been tested and caution has been built into their price model.
Companies that have a lot of unrestricted capital on the books and low debt ratios
This is difficult to easily realize as many companies have not released any information, so it takes a careful eye to discover such critical information. Tech companies that may not necessary have a lot of overhead like rent may fair better in the future as they will have funds to reinforce their operations in hiring new talent and advertising as the economy recovers.
Stocks that have alternate diverse income streams that are very pronounced.
Think of Uber that has the ride share that is suffering now, but they have uber eats and uber freight where resources have been shifted to in response to the change of their receipts.
Experts note that this may not be the bottom yet because as seen in the last week, the market has made several big dips this week yet today as 3 major markets; NY, IL and CA went into lock down, the market seemed to withstand the news. Either the market has absorbed the bad news and pricing has been built in or as the weekend comes in there is less incentive to move the needle in a wild way anticipating good news on the stimulus from the government next week. Either way, our suggestion is to ease on the short-term stock market profit and focus on long term growth strategies. It may be prudent to invest 60% of the funds intended for this into the market and leave 40% for a possible double down or short position if things go haywire as the labor report is released next week.
We understand that this may be a frustrating period but as soon as a cure is developed or a vaccine approved for use, the imminent risk posed by the corona virus will be alleviated and life will slowly start to get to normal. Think long term and avoid the impulse to buy large positions that may not materialize in profits in the short term.
Have a good weekend and remember we are here to help you in any way we can; our agents will be online this weekend and can answer any questions about investing.
The information above reflects the opinions of only the authors and do not reflect the views of Ntare Consulting. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed investment account or any other account and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Ntare Consulting, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success.