Monday, January 6, 2020

Fearing a Stock Market Crash in 2020

Welcome to the Investor in 2020.

Many people today are asking if there will be a stock market crash in 2020?

Will there be a Stock Market Crash in 2020?

Every year it seems the internet is all a buzz with the question of whether there will be a stock market crash this year. I have seen these headlines in financial papers and on financial  news programs for forty years now.
Should we fear a crash in the stock market in 2020, a large bronze bull statue on Wall Street, close to the New York Stock exchange
Bull or Bear in 2020?

The answer is a simple, no-one knows for certain. 

Last year   the markets went up, by around 30%. My own accounts went up between 25% and 14.8%. The 25% rise was in a single mutual fund stock portfolio which I had invested a large amount of cash on December 24, 2018, so hitting the market on it's lowest day of 2018. Gaining a large bounce in the first two months of 2019, over 12% in those first two months alone.

My 14.8% rise was in my long term holding Roth IRA. There are a lot of long term stock holdings in that account so they have had a long time to rise over the last 12 years since I opened the account.  Overall my long term return since 2007 is 133% overall.

Personally I say not too fear a stock market crash in 2020, here are my reasons why:

  •  Your time horizon for investing should be a long period. At least ten years for me.
  • Crashes in the stock market are relatively rare.
  • Crashes, corrections and dips in the market are good times to increase ones portfolio.
  • Fear feeds fear, sometimes fear of a crash may cause a crash or correction for no reason. Thereby creating potentially profitable periods.
  • Volatility in the stock market is normal. Creating potential profits.
  • Being a contrarian, people showing fear tells me that there is still not an overall feeling of euphoria, which can actually portain a period of downward pressure on the stock market
I do not say to ignore the fear.

Acknowledge the possibility of a downturn in the markets. But maintain a level head.

  • Buy stock in companies which make a positive cash flow and make profits.
  • I like to take a dividend stock over a loss making growth stock.
  • When in doubt, consider an Exchange Traded Fund or Low Cost Mutual Fund.
  • Create a strategy, make yourself flexible and modify the plan and strategy to the circumstances.
  • Never invest money that you will need this week or this year.

Read More advice CLICK HERE.

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