Reasons why now is the time to invest in Stock Markets
December 2019, in the city of Wuhan China, the first COVID-19 human case was reported and ever since then, the virus has spread across the globe resulting in the death of millions. Companies all over the world have been hit hard by this pandemic and incurred huge losses. Most of these firms might never recover again, because of such fears many shareholders have pressed the panic button and are selling their stocks at reasonable prices.
Selling of shares seems like a lucrative deal to save yourself from a drowning ship, you should also remember that there is always life after the war, in every Plague, there will always be survivors. While it is more important to focus on getting out of the health risk posed by the outbreak, it is also of prior importance to keep your eyes on what lies ahead after this pandemic.
Winston Churchill once said do not let a good crisis go to waste, and this time of the COVID-19 epidemic might be the most ideal time to seize this opportunity and invest in stock Markets. Warren Buffet once said “Be Fearful When Others Are Greedy and Be Greedy When Others Are Fearful”, they will never be another time to be greedy than now, the world is in a fearful stage and the time to invest in stock Markets is now, according to the World Bank it states that throughout history, more billionaires are made after an economic crisis, pandemics and wars than any other time. SARS pandemic of 2002 to 2004 catalyzed the meteoric growth of small companies such as Alibaba and helped it to establish itself at the forefront of retail in Asia.
In this article am going to give you 4 reasons why it is of prior importance to cease this moment and invest in Stock Markets
#1 Cheap stock Prices
Due to the economic downturn, most companies are not operating at full capacity and are not bringing in as much revenue as they used to. Because of such, the economic value of these companies has declined. Since the valuation is lower, the price of their stocks is lower. This is great news for new investors because it means it’s cheaper to buy stocks. Before the coronavirus, a few hundred bucks a month would have only allowed one to get a small percentage of stock in each of the major publicly traded companies. Nowadays, those dollars go much further. It’s like buying a lucrative investment at a discount. When the market finally does bounce back, the value of your investment would have increased exponentially.
#2 Many of the biggest single-day gains in history have occurred during bear markets
Although running for the hills might sound pleasant given the record-breaking volatility we’ve witnessed of late, it wouldn’t be a cautious idea. That’s because many of the stock market’s biggest single-day point and percentage gains have often occurred within proximity to its worst days.
What’s more, many of these top-performing days occur during bear markets. Thus, if you bide your time on the sidelines hoping for the volatility to pass, it’s almost assured that you’ll miss a significant portion of the bounce back from the lows.
#3 The world will not stop operating
Companies will still produce goods and consumers will still consume. Despite all the unknowns we are facing what we do know is that we still need to eat, we still need healthcare (more so now), we still shop online, and we still phone our friends. Now more than ever we are buying goods online, consuming more data as we work from home and our kids get schooled over the internet, and watching more movies than we have in the past.
While there may be a variation in consumption patterns over the short term, quality companies that supply the goods and services we need will still be here five, 10 and 15 years from now. We don’t know how long this crisis will last or what impact it will have on the economy. But in time things will normalize as they have done after every other crisis.
#4 Markets will heal in the Long Run
Despite the low valuations of stocks at the current moment, the market will eventually recover. While the value of stocks may not bounce back in a couple of months, over time, the market will normalize.
So if you not close to retirement and you are still young, if you invest now you shall reap the benefits in the not so distant future
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from iHarare.com.
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