Long-term Investing: Investors Should Choose Carefully which Dip to Buy - 1
By Saghir Ahmed Aslam
Rawalpindi, Pakistan
(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live with dignity and fulfill their moral obligations towards charitable activities)
Greed and fear are the yin and yang of investment. Bouts of anxiety have at times knocked the current long rally in equity markets off-course. But periods of trade tension, a growth scare for China, central banks’ monetary policy tightening and health crises have all proven relatively short lived.
At this juncture, judging how the corona virus outbreak will unfold and weigh on the global economy is a speculative exercise. This is first and foremost a human tragedy, as the death toll rises and cities are quarantined. This is the worst I have seen at this point very bleak story and it may get worse depending how we inexperienced investors react. Long history of stock market this to shell passes.
Still, there are potentially serious economic, corporate and market considerations. The virus has triggered a fairly typical reaction across financial markets, and one that has primarily focused on sectors and companies deemed the most vulnerable to the risk of a near-term growth shock from China. Shares and bonds in airlines, luxury goods, leisure and travel, banks and miners have slid over the past week as investors become anxious over Chinese demand for consumer and industrial goods.
Global companies with significant revenues tied to China are under the most selling pressure. Carmakers, tech and consumer groups reliant upon supply chains in Asia are scaling back some of their operations. This week, Apple issued a broader range of revenue guidance for the current quarter, reflecting the importance of the Chinese market. Even great performing stocks like apple have also suffered heavily.
Investors have headed for the usual havens of gold and top-tier government bonds, and away from some of the more speculative forays of late — such as owning high-yielding emerging market currencies and energy debt.
The investor playbook from prior bouts of market tumult is that sectors experiencing the most selling pressure today should lead an eventual rebound, while government bonds and gold will shed their recent gains. This likely scenario means long-term investors have an opportunity to adjust their portfolios and take advantage of cheaper prices in selective areas of the market. Must, be extremely careful.
(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr. Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr. Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor or certified financial planner. MrAslam does not have anything for sale.)
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