Search for opportunities in crises
This article is definitively not about trading or here to animate you to buy risky stocks. But I want you to become aware of the great opportunities you can come across in the actual crisis. Just take a look at Bear Stearns. After it dropped to $5 something, it recovered in a few days to $10 something. That’s 100% in 5 days for buying the stock, not considered buying options or something. I admit, that’s a very risky example, but I wanted to show how fast it can go. Usually it takes some time for a turnaround. Additionally, I think you have to be a trader to recognize such a chance like Bear Stearns and actually buy in. But we are real long-term investors here and do only buy if the story, earnings etc. are going to change in the next years.
It’s a crash! Hurray!
Stocks just got cheaper on one single day, let’s celebrate! No seriously, OK, you lost some money, and I am sure you lost some because I assume that you are fully or partly invested, but that’s not the end of the world. We are long term investors and sell when the market is hot and buy when everybody sees apocalyptica coming. Over a long-term period of 10 years you surely will see market declines a few times, so do not be shocked. Crises and recessions also kill weak companies which cleans up the market and could be considered as good for investors. However, do also never ever try to predict crashes, that’s just not possible, nobody can predict the market. But you have to be prepared.
Good companies at a cheap price
Good companies at a cheap price, that’s what we are looking for. But when it’s the best time to buy such companies? Surely not when the stock market is totally hot and the p/e ratio is 30 or more. In this case you have to wait for a market decline, so you can get a good price. Super-investors like Warren Buffet just wait for such opportunities to come (there is a reason why he had this billions in cash). Also, investors from the Middle-east and Asia bought shares of big companies in the US and Europe. The pros do it and so can you.
You should always have excellent companies on your watch-list that you want to buy, but the price is to high. If the story didn’t change, crises can make this stocks cheap because of panic on the stock markets and you can profit from it. You buy cheap and sell high in a few years after the market recovers and the stock price is again much higher than the real value of the company.
But remember: Always be careful and do not try to catch a falling knife! You have to know what you do, so do proper research first.
Recommended:
If you’re trying to find more information about people search and unclaimed money, then check out USA-People-Search.com. They will help you perform public records search on potential employees to ensure you are employing good people.
Comments
5 Responses to “Search for opportunities in crises”
Leave a Reply
-
-
Recently Written
- Barack’s effects on the economy
- The bailout plan
- Facing a world economic crisis
- Electing an US President
- The magic of compound interest
- The Robotalisation - a theory of a new economic revolution
- Three investing misconceptions that are not true
- The comeback of the dollar
- The secrets of Warren Buffett´s success
- Rebellion of the hungry
-
Categories
-
Monthly Archives
-
Financial Sites
Wall
-->
Markets Today
| DJIA | 7997.28 | |
| NASDAQ | 1386.42 | |
| S&P 500 | 806.58 |
Search for opportunities in crises | Investing |…
Don´t know what to do in a financial crisis? Buy stocks because now they are cheap check out why and when …….
Very true… I think our views find a common resonance because of the underlying fact that we understand the basic nature and quality of the investments made. For the rest of the junta who survives off the tips given by their taxi drivers and maids, every crash surely is a doomsday…
Keep coming with good posts. And in the meanwhile check out some of my posts on global economics and markets
[...] market drops Stocks markets go down in recessions, but as stated in one of my previous articles, Search for opportunities in crises, there are great opportunities in stock market declines. During periods of mass panic on the market [...]
Interesting point - but I am not sure that really explains the situation. With gas over $4 a gallon that changes everything.
[...] 5. Don´t hit every ball ! [...]