Through 2017 the prices of the stocks were pushed to a level where they were hitting all-time highs almost each trading session. Many indicators were showing warning signs but no one was there to heed those warnings.
I already told you that i like trips to the past right? So let me take you back a year ago
In 20.07.17 I warned about what is going on right now, in my article “The Buffett correction” writing:
“I believe that we are on the highway for the next market fall it’s only a matter of time and I’ll elaborate about it in my future posts I’m already considering some investing strategies in safe havens.”
Since then for 2017 I only invested some money in one stock that I already held, I strongly believed that it had more room to run and it did go higher 29%. Other than that I was sitting on the sidelines and waiting for a bargain to pop up, and while I’m doing that I started piling up cash. Although in 2018 I invested in one stock and I’ll tell you all about it in my future posts.
In my 28.07.17 article “Throw back to “Buffett correction theory”” back then I wrote:
“We are in all-time highs, everyone seems very optimistic and in this times you should remember that euphoria is your enemy, just be patient don’t try to time the market but have a pile of cash to take advantage of the drops.”
My purpose for citing those things isn’t to say: “I told you!”, but what I’m trying to say is; it was a predictable move and as a long term investor you shouldn’t panic.
In my opinion we are NOT heading into a bear market. But no one can really know what will happen in the short term, The Dow already shed 8.53% from its all-time high, the S&P 500 lost 7.79% and the Nasdaq 100 dropped 7.51% and it’s only since Friday. But the overall economy is in a good shape and that is the major problem for stock market now (Check my previous article).
Some analysts and watchers are already pointing fingers saying that this sell-off is caused by the “algorithmic traders”, which use automated orders such as “stop loss” that make them dump their holdings (and believe me they have big ones) at a certain prices that has been already decided on.
The Crypto market?
I have been against “investing” in the cryptocurrencies for a long time now. I’m not saying the cryptocurrencies are fraudulent. But yes they were in a bubble. In 09.09.2017, I released an article called “The difference between investment and speculation” then I wrote:
“I just think the whole billions that are plowing into the Bitcion and other cryptocurrencies aren’t justified by any qualitative or quantitative grounds, people are pumping money like crazy only because of the “beautiful story” the cryptocurrencies are carrying with them and some because they know that their friends just made 10 times their money (or more in the case of Bitcoin) and they want to join the party too, and that’s my friends is how a bubble is formed”
Well take a look at the prices of the cryptocurrencies, Bitcoin was more than cut in a half, falling from its all-time high of almost 20,000 below 6000 this morning. Ethereum reaching 676$ and Ripple reaching 0.686$. I don’t know whether they are going to take off from these levels, or go down even further but what i know is that stocks are better option for me.
Invest your money carefully and wisely, and you should be ready for those wild swings in the stock market.