Investment professionals have been predicting a crisis for a long time, as the monetary policy used in the last 13 years (this is a very long time!) By the central banks of Europe and the USA have been aimed at quantitative easing. And this is a direct path to crisis.
Insides from experts
One of such competent people is Mikhail Mitrofanov. He is a young but very successful businessman, the owner of the current international real estate agency VillasHomes, whose office is located in Thailand (Phuket). He also has his own network of advertising and production companies CreativePRO. In addition, he is engaged in investing in securities and assets.
In this article, Mikhail shares his opinion on the coming crisis and gives valuable advice to novice investors.
Correlation of stock market and crisis
“If we talk about an optimistic forecast, Mikhail said, then I believe that the most successful option would be a situation similar to the one that developed in the stock market due to the pandemic in March 2020. Then the S&P 500 index for about one month (from February 10 to March 16) fell by 32% at once, which provoked a sharp decline in the stock rate. But then, over the course of several months, everything returned to normal, and by the end of December 2020, the situation was getting better. But this perspective is not the only one. More and more professional investors are leaning towards the second option – the “bursting bubble”.
A graphic historical example is the crisis that began in 1929. The market decline lasted for 3 years. During this time, the Dow Jones Industrial Average fell 90%. In addition, in 1930, a huge number of investors suffered from a bearish rally.
There is also a more modern version – the so-called “dot-com bubble” (“dot-com” is a term for companies operating exclusively on the Internet). Again, in March 2000, the crisis began, which lasted until October 2002. During this time, there have been several bearish rallies, and one of the main US stock exchanges, the NASDAQ, has collapsed by almost 80%. But on the eve of the crisis, some of the largest companies were able to increase rates up to 1000%! For example, the index of the same NASDAQ rose by 400%.
Conclusion of Mikhail Mitrofanov
A similar situation is now observed: the shares of technology companies are growing rapidly, but the interest rate is practically zero. Whereas in 1999 it was about 6%. Therefore, we can conclude that the current state of affairs is even more sad.
What conclusion is Mikhail coming based on the listed factors? A crisis always comes unexpectedly (even if it is expected) and is always associated with financial losses. This cannot be avoided. But you can take measures that will help to minimize losses. If you don’t have a reliable financial airbag, you should heed these tips:
Any investor should prepare in advance for a possible crisis. This refers to knowledge and actions that will help a person to adequately assess the situation and not fall into a panic in the event of a fall in the stock market.
The decision to sell stocks or securities in panic is always a lottery. It is better to save up a certain amount in advance to buy shares that have fallen in price. If this is not possible, in no case do not panic, but acts in accordance with the originally conceived plan.
See things realistically. It is unwise to invest almost all funds (including pension savings) in the technological sector of the stock market, hoping to receive good dividends. Working while investing some of the money in an S&P 500 company to generate an additional source of retirement income is another matter entirely. Then, in the event of a crisis, you will also be able to buy assets that have fallen in price.
And one more tip – in 2021, Mikhail strongly advise you to spend some of your funds on the purchase of cryptocurrencies. This is a market with great prospects, in which he personally believe very much. ”
By the way, especially for those who want to invest, Mikhail Mitrofanov launched a free training course. It is suitable for both beginners and people with a certain experience in investing. The businessman guarantees that the information he gives is a unique author’s product developed on the basis of several paid courses and his personal experience.
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