Standing Strong to On Our Knees in Record Time; Why Now?
Day 5/Post 5
The world economy was in good shape through the start of 2020; the global stock markets were giving no appearance of wobbling.
Who knew there was a storm brewing that would bring the world to its knees.
Many nations collapsed from the weight of the coronavirus pandemic.
Each country forced to bring its economies to a halt.
All companies big and small were at the mercy of the likes we had ever seen. Entire industries shut down, and companies forced to lay off millions of their employees.
My feelings are great companies can weather this health storm. The underlying economics that had their stock prices at proper valuations before the pandemic will see these values return. Why wouldn’t they?
My wife and I decided in early 2020 to try online investing for the first time in our lives.
We have signed up for a Questrade online investment account. Every morning for years, I had watched BNN Bloomberg dolling out great advice through their guests. All of this great information, and I was a passenger. Sitting on the couch in front of the TV, watching great help, and ownership of great investments go.
Remember, I am not a trader; I am an average investor—my advice from personal observations and what I am learning as I go. I give you no guarantees what worked for us will work for you.
During these volatile times thought it would be nice to share our online investment story.
For as little as $1000, you can get started.
We set up two online accounts each for my wife and myself, one account managed by Questrade (we answer questions about our investment goals, level of risk, and how long we prepared to invest these funds), and they create an investment strategy to match our goals.
In the second account, we set up a self-directed account trade account and decided to decide on what to buy and hold and sell.
An active investor like an investment real estate investor’s only difference is the holdings we were purchasing managed by someone else.
We figured if we had to stay home and sit out this health scare watching the entire world’s health, financial and political experts give us their health and wealth information for free. Why not see if we can mine the nuggets of gold.
I am already adopting some self observed financial insights, and they are paying off.
Lessons to Share:
- Don’t try and wait for the bottom of the market
- Know if you heard great information about a company, act as quickly as possible because there are hundreds or thousands of other people who listened to the same news. I have seen the stock prices rise rapidly, right after the story or advice has aired.
- If you invested in 2007, 2008 and 2009 in individual stocks, how much did they drop in value then and, what were the shares worth before the coronavirus pandemic hit?
- In North America, we saw many great companies’ values drop for no strong economic reason (many great companies dropped in stock value from 50% to 95% from their highs). The valuation of quality stocks destroyed.
- The market bounce back during the Great Depression took almost five years and, in 2008/2009, it took 18 months.
- Do you have a buy and hold cycle? If you have cash, how long is your horizon before you need to access these funds? My wife and I mid-January 2020, started a new five-year investment cycle, this money is part of funds we are earmarking for a multi-complex real estate purchase.
- If you have some cash, no matter how small an amount, you can sit and wait for the right conditions that will never come or to jump in, do your homework and buy.
- Remember Short-Term, Mid-Term or Long-Term Buy and Hold strategies come with their set of conditions, do your homework.
- Dividend-paying stocks only, like my firm belief in real estate, you cannot spend the equity growth unless you sell the property or stock. The global economy is always at work, making money while you are sleep. Unless the shares you purchase, pay you a dividend, why buy? (there are too many stories of Uncle Bob getting a stock tip, do your homework.
- There are many free sources regarding training on how to trade in the stock market abound. Questrade’s online training alone is darn good.
- Don’t over complicate things.
The Stock Market opportunities are fantastic right now and until the world bends the Coronavirus Curve.
Cash is King, as the saying goes.
If you are looking for short-term cash returns, the stock market can be like buying a lottery ticket, risky.
If you do your homework, understand the companies balance sheet you are purchasing, look at all of the free financial charts of these companies.
For us, if stock prices rise, modestly, and dividend returns stabilize over the next five years, then I am feeling pretty darn good.
What’s going to be your 5-year story?
Remember the financial melted down of 2008/2009, (March 9, 2009, was the bottom of the market) eighteen months returning much quicker than the 1929 stock market crash that took five years.
Humankind has conquered many pandemics over the centuries, coronavirus is one for the ages, and it will be defeated.
From Our Happy Place to Yours, Be Healthy, Be Safe Until Our Next Post
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