with all of this in mind, I still believe this crash is a good opportunity for everyone to build a decent stock portfolio and reap the benefits of it in 3-5 years.
you just have to analyze the companies you want to invest in a bit differently this time. look at corporate debt more than anything. don't pay attention to dividends first, you don't want a high dividend paying company that can file chapter eleven in less than 12 months or simply stop paying dividends. you want to invest in companies with a bright future and manageable debt.
those are the ones you should want to buy when they are dirt cheap.
here is a good list of questions you should ask yourself before investing in a company:
How long they have been in business?
How are they making money? what is their main product? how popular is that product?
Is the “need” for the product going to be there in 10 years?
Which companies are their biggest competitor?
Is there something innovative that sets them apart from the competition?
How sustainable is the business model?
And if you want to see if the share price of a company have tanked as much as possible or if there is still room for it to fall more, all you need to do is to investigate their main product and see if it has parts that are going to be delayed or become unavailable due to COVID19 lockdowns. is the delay already priced in? or will the effect of it be shown later?
do your due diligence. don't just buy every dip thinking this crash is like the one in 08 where market recovered in a year. back then while the market collapsed, the everyday life of people wasn't affected so recovery happened quicker after the government stimulus was implemented. this time, this virus is going to affect our day to day living for a while.. and this time people aren't willing to just let the government bail out banks and corporations easily.
with recent rate cuts a lot of people are looking to move their money into stocks, so I thought it couldn't hurt to put this post up as a warning.
If you have a +$500K stock portfolio, you can reach me directly (@Linorth) for consultation on it or for help in diversification.
you just have to analyze the companies you want to invest in a bit differently this time. look at corporate debt more than anything. don't pay attention to dividends first, you don't want a high dividend paying company that can file chapter eleven in less than 12 months or simply stop paying dividends. you want to invest in companies with a bright future and manageable debt.
those are the ones you should want to buy when they are dirt cheap.
here is a good list of questions you should ask yourself before investing in a company:
How long they have been in business?
How are they making money? what is their main product? how popular is that product?
Is the “need” for the product going to be there in 10 years?
Which companies are their biggest competitor?
Is there something innovative that sets them apart from the competition?
How sustainable is the business model?
And if you want to see if the share price of a company have tanked as much as possible or if there is still room for it to fall more, all you need to do is to investigate their main product and see if it has parts that are going to be delayed or become unavailable due to COVID19 lockdowns. is the delay already priced in? or will the effect of it be shown later?
do your due diligence. don't just buy every dip thinking this crash is like the one in 08 where market recovered in a year. back then while the market collapsed, the everyday life of people wasn't affected so recovery happened quicker after the government stimulus was implemented. this time, this virus is going to affect our day to day living for a while.. and this time people aren't willing to just let the government bail out banks and corporations easily.
with recent rate cuts a lot of people are looking to move their money into stocks, so I thought it couldn't hurt to put this post up as a warning.
If you have a +$500K stock portfolio, you can reach me directly (@Linorth) for consultation on it or for help in diversification.
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