I got asked these questions very often in the last period because what’s happening to the market and the massive decline the Corunavirus had caused:
Should I sell? should I buy more, if yes when?
Or for first-timers: should I start now or wait?
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I think there is no single answer to everyone because it depends on which strategy of investing you’re following, some like buy and hold long term investing probably they will buy more each time the market offers a 10% discount, for example, others maybe wait until the situation ends …
But here in this article, I will try to give a general answer to everyone what we should expect and when it is the best time to invest. For that, I will use my technical analysis experience(I’m an ex-trader) which what I usually do when I want to know which best price levels to invest in. It is just an assumption, nothing sure as no one can predict the next move of the market. I want to keep it simple so I’m not gonna talk about RSI or any other technical elements.
For those who don’t know me and are first-timers, I mainly Invest in dividends stocks using dividends growth investing strategy together with value investing, I Simply invest in blue-chip solid companies with a wide moat and I buy and hold forever. This is my plan for building wealth long term and reaching FIRE (Financial Independence, Retire Early).
What you see is the S&P 500 index, the red lines are the past 2 recessions (2000, 2008 and the current market decline), the black lines technically are support and resistance levels, where the market crashed and recovered from.
Before I come to the current situation let me demonstrate the past 2 recessions. In 2000 the market felt down around 50% from 1500 points to 750. Surprisingly the market felt down again in 2007 from the same levels from 1500 to 750.
So what we have learned and how to apply it In 2020:
It is not likely to go down to 750 again so I’m not gonna consider this option(it will be a horror if it really happens)
However, there is a strong ex-resistance/ support around 2100 and 1500 which I probably expect the market to visit if the current situation continues for a longer time.
So to summarise it, 2100 points which represent around 30% down and 1500 which is around 50% down, is more likely the market will rebound from and it is the best level to buy more or start investing.
You can find my stock portfolio updates also how I pick my stocks Here
I just want to conclude with some advice about investing in the current situation:
Don’t panic, don’t listen to the news, don’t sell.
Keep investing, keep following your strategy.
Get ready with your cash to enter, in the next couple of months, there will be buying opportunities, and the deals you will get could be your best investments ever.
Please if you have any questions, feedback or anything you want me to cover/ explain, don’t hesitate to leave a comment or contact me. Also, don’t forget to subscribe to my newsletter so you don’t miss any new posts.