by Jack
The corona virus is hanging over the stock market like a huge black storm cloud. However, for all the thunder and lightening, scary as it may be, this storm has done very little actual damage. The real damage has been self inflicted. From Feb. till now about 2.3 trillion dollars left the market due to panic selling. But, the underlying wealth, the actual companies behind that stock selloff are still strong, still necessary and this presents us with one of these rare buying opportunities. However, the key to making a successful buy is timing! Please read on.
The only way I know to do prudent investing is like this: Be prepared to stay in for the long haul, 1-5 years or more. Use dollar cost averaging for each stock buy and never buy on the margin! Diversify your portfolio with 10-12 stocks in 3 or 4 sectors and buy quality (preferably something with a small dividend). Prioritize your first buys based on solid trends. Psychologically an early profit here will give you staying power.
Right now Glaxo Kline Smith, Merck, Sanofi and Novartis are likely to be the main producer for a Corona virus vaccine. That’s good, this will give them lots of attention and it will certainly help their bottom line. But, the profit to be made from selling vaccines is relatively small, usually 1-4% of their total income. However, because of the notoriety these stocks are now “in trend.” It’s a safe bet there will be plenty of investors ready to snap big pharma stock at low prices. The same could be said for Johnson and Johnson, Bayer and Pfizer, all strong companies that have been hammered with the sharp and sudden downturn in the market, but they are all poised to do very well in the coming months.
You just have to use your brain. Figure out what stocks will likely do well and which stocks probably won’t because of this temporary health scare. For example, banking stock, theater stock, restaurant stock, oil stock like Exxon, BP, Murphy,…all losers at the moment, but the good news is they are all approaching those tempting bargain basement levels. How bad could you be hurt falling out of a basement window, right? Something to think about.
For those with a little spare change, some imagination and the conviction to see it through, there is wealth to be made. But, timing is everything! Don’t be too eager to jump, better to miss the bottom price and get in close to the bottom when its on its way back up.
NOTE: Stocks mentioned in this article should not be seen as an endorsement to buy or sell. Use your own due diligence whenever investing in the market.
If you’re into the stock market, DO YOUR OWN RESEARCH! Don’t listen to the inflated talking heads!
You probably will never buy at the lowest $$ nor sell at the highest $$ unless you’re very lucky. Getting an excellent financial advisor helps, too! And if you own stock, always consider placing a stop order so your investment won’t go into free fall.
And NEVER invest more than you can afford to lose – that’s like limiting yourself when visiting a casino!
Good advice. The Dems are trying to blame Trump and his handling of the Wuhan virus on the tumble but that is demagogic political nonsense. And yes, the market will recover. My prediction is that by October all the market noise will have passed and the only noise will be desperate political noise from Dems.