Investor’s Business Daily writes that it may be time to go “all in on stocks” now that there is talk of opening up the economy again. Is this right or will continuing bad economic news send stocks even lower? When will be the time to Buy Stocks again?
When Will Be the Time to Buy Stocks Again?
Our sister site, Profitable Investing Tips, wrote about this very issue and noted that if you compare today to the 1929 crash that started the Great Depression, that crash lasted three years!
Economists are already saying that the coronavirus pandemic will drive the world economy to levels not seen since the Great Depression. In our article, How Far Could Stocks Fall, we noted that the 1929 stock market crash (which ushered in the Great Depression) was not limited to October of 1929. The market continued to fall until late 1932 by which time the Dow Jones Industrial Average had lost 90% of its previous value. Anyone who has cash in hand will have many opportunities to buy excellent stocks at bargain prices when the market bottoms out. But, when will that be?
Expert investors like Mark Mobius also say that the Market has not hit its bottom.
The Coronavirus and How We Deal With It Will Decide the Course of the Stock Market
We are starting to see the financial damage of the coronavirus crisis in quarterly earnings reports and they are pretty grim. The stock market has reacted by falling a few percent again. While governors are planning slow and cautious reopening of their economies, it remains to be seen how many people will get back to work and how many businesses, especially small businesses, will survive.
The mixed messages coming from the White House are not helping nor are the attempts to divert blame for the slow initial response to this crisis. It should be no surprise that the market reacted to not only poor earnings reports but to Trump’s threatening to cut off funding for the World Health Organization at a time an international crisis threating lives (and investments) throughout the world.
What we repeatedly hear from those with the expertise to deal with this crisis both medically and economically is that we need to be driven by the science and not by politics, personal ambition, long-standing grievances, or the desire for power. When the world sees progress on both of those fronts, it will be time to buy stocks again. Unfortunately, while we are seeing some progress on the medical front due largely to social distancing, we are not seeing it in the USA from the administration.
Hedging Your Bets
If you believe that the market is near its bottom and that a recovery is not only due but that it will be strong, we suggest buying call options on your chosen stocks in order to lock in potential profits while protecting against downside risk.
Even the Great Depression turned around, especially with spending to support the war effort in WWII. A long term investment opportunity to consider might well be companies that will benefit from the sort of infrastructure improvement projects that the nation needs and that will help stimulate a healthy recovery.
