Stock Market Crash Reveals New Strategy for Investors


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The unprecedented COVID-19 has greatly affected the stock market.

For about the last 11 years, investors in the stock market have grown accustomed to high returns and a booming economy that presents itself with new jobs and companies. However, that streak has come to an end with COVID-19. The last time the stock market has undergone a recession was during 2008-2009. Although the crisis devastated many people and the economy, I believe we are facing something way worse. Back in 2008, it was much clearer what the problem was and how to solve it. Yet, in 2020, we are now facing a virus that is unknown for the most part as well as its impact on the global economy. People are being furloughed, small businesses are going bankrupt, and most people can’t afford to pay their rent. How did we go from such a thriving economy to one of utter despair and uncertainty within 2 months. The answer is simple, COVID-19. The solution is not as simple.

To start, it would be beneficial to look at how the market has behaved since the coronavirus became a national issue. I am going to date this time to about the middle of February. Since then, the stock market has dropped considerably (around 20% give or take). Usually, drops like this are attributed to people panicking and selling their shares in order to prevent ‘losing more’. I think that when things turn south, panic selling is a terrible idea. I will explain why later on. Since the sell-off, stocks have rebounded considerably in the last 2 weeks. However, it is hard sometimes to understand why the stock market is going up when things look so grim. The answer is very complicated but what it does teach us is that it is unpredictable. With the sell off and buy back periods, the market can definitely be categorized as “volatile.”

Now, I think it would be wise to look away from the present and towards the future. This is where most investors look during a time of disaster. The reason why panic selling during this time is a bad idea is because you will lose money. For the stocks that have lost considerable amounts, you are better off holding them for a few years than taking your money out of the market. The stock market will go up again and it’s only a matter of time. The future is unpredictable with the virus but the fact that the economy (of a different kind) will open again is inevitable. Because of this fact, I would like to offer some advice and predictions.

First off, I believe that most people who invest their money will panic during this time. It’s just going to happen. Even though the virus is very devastating to one’s portfolio, I see a great deal of beneficial opportunities in this time. Stocks will be cheap within the next month and it’s the right time to re-invest the money you have back into the market.

In a situation like we have with COVID-19, I strongly believe that “cash is king.” If all your money is in the market, that was great when it was going up, but it’s very bad when it’s going down. Personally, I would predict that the smart investors will stockpile cash and invest back into the stock market when things go down another 5-10%. The main takeaway from looking towards the future is that there are going to be people who lose money from fear, those who hold their money and don’t make any, and those who invest and make money. Although it requires looking past fear and risk, the people that will benefit from this economic downturn are those who are willing to take risks.

Overall, the stock market is unpredictable and very volatile at the moment. However, I am certain that it will return to normal in the future. If you are in the stock market or looking to get in, I would say in the next month is your chance. To make money now is by being a risk taker, being calm and observant, and to look at companies from a futuristic perspective rather than one of the present.