We are all aware of the economic crisis the world is facing, and there have been market lows all over.
It is mainly due to the coronavirus pandemic and the enforced lockdown that has threatened to cripple various economies. The stock market is more volatile than ever now because most investors are in a state of confusion.
They keep asking themselves these questions, “Should I buy these shares or sell the ones I have in my portfolio?”, “What if I sell these shares and the market stabilizes, how will I cope?”, “What if I hold onto these shares and the market crashes further, what will be my fate?”, amongst other technical questions.
At the time of making this video, the stock market has taken a positive leap.
Dow Jones Industrial Average, for example, has recorded a positive value of about 7.68%. We will be looking at all the circumstances surrounding this positive leap, and also I will give suggestions on what I think you should do in these troubled economic times.
Hello viewers, you are welcome to another of my blog sessions. As always, I am committed to helping you to grow financially and offering you all the expert advice I can give in terms of investments and financial freedom.
In this blog, we will be discussing what is making the stocks prices take a positive turn and what smart moves any investor should make to avoid making any losses.
Before we begin, I want to ask a question, have you subscribed to my blog? If the answer is no, I really wonder what you are actually waiting for. I have so many related articles like “Five Tech stocks to consider for November”, “Why the stocks keep crashing”, and “My five stocks for November (2020)”. Subscribing to my channel gives you access to these and much more.
These are the things to consider now that stock are getting high
Why are we suddenly seeing such good returns out of the lows?
Well, it started when Pfizer Inc., an American multinational pharmaceutical company, came out to say that their coronavirus vaccine is more than ninety-per cent effective.
This has led to euphoria in the stock market, everyone seems to be excited, and stock prices are going higher.
So, we will be discussing three major things in this session:
- Why the vaccine is so important to the stock market.
- Are there any buying opportunities as the stocks keep moving up and down?
- Should you sell or hold on to some of the stocks in your portfolio?
These are the things I want to discuss and share with you, so I strongly advise that you stay till the end.
By the end of this blog, I believe you will have learnt enough to make the right decisions in the stock market.
So, what is the major importance of the vaccine to the stock market?
Before we discuss that, I believe we need to anticipate its effectiveness for health reasons.
If a vaccine is found, it definitely means there will be fewer cases of deaths in the world. So, its importance to health cannot be overemphasised. Now, what is its importance to the stock market?
The stock market reacts to any slight changes in the different sectors of our economy.
Look at it this way, when there is a change in the negative direction, the investors try to adjust by making panicked transactions, thereby causing the stock market to become volatile.
However, when there is a change in the positive direction, investors want to adjust to the situation by buying more, causing stock prices to go higher and higher.
Some time ago, there was a change in the negative direction, and things actually went wrong in the stock market.
The DJIA lost some points and investors were panicked, and they started making irrational decisions. Now, the shift in the positive direction is making investors wonder what next.
The news of this vaccine has been long-awaited by investors. Did you notice that some other companies came up at different times to say they found a vaccine? It made the stock prices bump up a bit. This just goes to show how much investors are hoping for the good news.
With Pfizer Inc., a highly reputable company coming out to say their vaccine is over ninety-per cent effective, I believe it may be the best news investors have been waiting to hear.
We all know vaccines protect us from diseases. So, this coronavirus vaccine will protect us from the disease, and there is an air of optimism that things will go back to normal.
By going back to normal, I mean that businesses will open up, social gatherings will now be permitted, sports events will take place, etc. without any fear of spreading the virus. Money can now be circulated once again.
But there is a little problem. The vaccine is in its early stages, and for it to be available for everyone might take a while.
Some experts even place it around mid-2021. Now, the stock market does not care about this, and prices are just going up. If you made any profits with this positive change in the market, you could celebrate.
But being a smart investor requires you to look beyond what every other person sees.
Are there any buying opportunities as the stocks keep moving up and down?
If you look at the gainers and losers of this vaccine news, there is a clear pattern: Businesses that require the presence of human interaction seem to be getting the green, while the typical work-from-home stocks seem to be the ones suffering from this new development.
If you look closely, you will see that this is just a reverse of what has been happening in the last couple of months.
My opinion is this: Things will not exactly go back to normal after this current phase.
Some may ask what I mean. Well, let us assume things go back to normal, do you know that some people have become so comfortable with doing things from home that they will not want to go back to doing things publicly?
Let us take, for example, a business that was forced to go online due to the enforced lockdown. The entrepreneur would have seen all the benefits of doing online business and working from home by now.
Do you really think that businessman will go back to renting a store and going from place to place to market products? The answer is no.
The same goes with some social meetings that can be done online through various apps, exercises and gyms that have been set up at home, etc. This may end up hurting the traditional businesses we have grown accustomed to.
So, even though the stocks that are booming now may be presenting buying opportunities, you might want to consider the long term. And when I consider long term investments, I still think tech stocks are the best.
So, if we are going by my opinion that things may not go back to exactly how it was before, then you may need to think twice about investing in the stocks that are booming now. I am not saying these businesses will shut down for good, but there may not be as many clients as before.
Should you sell or hold on to some of the stocks in your portfolio?
Truth is, the best time to buy stocks is when you notice some decent dips.
It is worthy of mentioning that before venturing into a stock, you should have been monitoring and analyzing it for some time. So, it may not be entirely foolish to do some trading today.
But, to answer the question, should you sell or hold on to your stocks, my answer is I do not think it is time to sell your stocks.
The reason is I do not think this positive change is sustainable. The positive change happened because of the news of a vaccine that may take some months to reach everybody. It is almost the same time it will take the economy to go back to normal.
It is the wrong choice for investors to sell whenever there is slight volatility.
The vaccine may be good news, but we really need to factor in the time it might take to make the economy stable again. To be a successful investor, you will need to focus on the long run.
There are still other businesses that may be struggling now but have the potential to bounce back, and those are the kinds of stocks smart investors should be looking for. If you really feel like you need to sell, you can always sell your principal investments to get your capital back and watch the rest play out, however way it chooses to.
This way, you will let your profits make you more profit, no matter how little.
There are some stocks that need to be sold during this period, though, but that will depend on your level of expertise and the kinds of stocks you have in your portfolio.
I hope I have been able to give you my insight on what the vaccine might mean to the stock market and how I feel you can find your way around it.
If this article was helpful in any way, please like and share it. Also, I urge you to subscribe to my blog for more insightful blogs. You can also drop your comments.
Recommended books for further reading:
- The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits
- The Warren Buffett Way
- How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
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