Disclaimer: This is an opinion piece. Please do you own research and make calculated decisions based on your analysis.
In March 2020, I wrote an opinion article about an opportunity to buy stocks when the market fell (stock market index was at 4,778). Today, I'm writing again as I just sold my positions in the 1st week of March 2022 with an average gain of 32% on those I accumulated from 2020 to 2021. I do NOT advocate on timing the market, it's just coincidental that my positions reached the threshold. My personal threshold on selling will depend on my personal economics but it's around 10-30%; fairly conservative if you ask me.
If you're in the same predicament as I am, i.e., "I have unproductive money in my account, where do I park / invest them?", then you came to the right page!
Well, we can discuss about it because I'm also at a dilemma and I might be wrong too. However there are several factors to consider. Let's discuss the current climate first. For one, the Federal Reserve System a.k.a. U.S. Central Bank a.k.a. The Fed is keen on raising interest rates in the near future which will have a ripple effect on the global market. As it's becoming more uncertain that the U.S. interest rate will remain the same, investors are more wary. Then there's the conflict in east Europe, rising oil prices, hyper inflation, etc; not to mention the pandemic is not yet fully over. All of these economic and geopolitical uncertainties weigh in to the short to medium term performance of the stock market.
With all the factors considered, I'm putting certain percentage of my portfolio temporarily on accumulating USD (51.40 as of writing) and Ethereum (3.23K USD as of writing).
You heard me right! Ethereum!
I consider crypto as very high risk, so I'm just putting small percentage. And in the world of high risk crypto trading, I'd only trade Ethereum and Bitcoin as part of my investment portfolio (maybe I'm old school like that). The rest goes to a "high-interest" savings account and remain liquid. I currently have with ING (2.5%) since their app is super easy to use (not a paid ad).
If you are purely into stocks, it's still possible to choose companies that can gain during an economic downturn. You have to be careful though, it's more tricky and you have to analyze the current economy and the company's operations and financials. For example with the current climate, there is relatively high inflation and one might anticipate that USD will appreciate, so it's important to choose the companies that can dictate their price on their goods and services, those that are not highly at risk to hyper inflation and depreciation of Peso, and those that do not require recurring high capital to make a profit. It's also beneficial to pair with technical analysis to know your entry points. The details of this is already a separate topic and to be covered in a future article.
You might have already guessed what I would say to answer the question from the title of this article: no one knows!
No one knows if there will be a sharper correction or a stock market crash. Certain factors point to it, sure, but everyone is saying a stock market crash is imminent.. EVERY YEAR! And so far, it didn't happen. There was a knee jerk reaction at the start of pandemic, but I wouldn't count that as an actual crash since it didn't follow through, unlike the 2008 crash which lasted around 2+ years. The 2020 stock market dip was just a blip!
I will start accumulating stocks again if I see a bargain in the future (PSEi is at 7K at the time of writing), but for now, I'm more on the liquid side; I will reply to this article when I start buying shares again. My personal strategy when buying stocks is to sell them when they increase 10-30% in value. It may take a few months to a several years, but it's my personal choice. I would suggest that you have your own strategy as well, and I hope it's the one that you would enjoy. Each one is different, some enjoy short term investing, medium, or long term. It will really depend your personality and risk appetite. If you cannot sleep at night being anxious about your investments, then you might want to change your strategy.
Peace of mind, in my opinion, is still more valuable than earning money.
Happy investing, everyone!
by bertty 04/13/2022