In March 23rd, the market (S&P 500) tanked, bottomed up and bounced back to its current level.
Many of my friends and articles that I read talked about the next stock dip coming soon, the dead cat bounce. This is reinforced with the fact that historically looking at the Vix there seems to show a double dip during every crisis.
So the million dollar question is should we be in cash or in the market? If you listen to what Warren Buffet does, then you will be in cash waiting for the real bottom or if you feel that COVID19 has run its course or the Fed has reacted early to help safe the market from crashing, then you would be starting to look for stock positions to enter. If this is the case, here’s an article by Tom Bowley on the types of stocks or companies to purchase.
What he suggests is we shouldnt use the old ways of measuring or qualifying if a stock is worth buying. The PE ratio and methods are 100 years ago and the situations have changed alot since then. So for that, he mentioned to focus on individual stocks and to stay away from core categories that is affected by Covid like Travel, Oil, F&B for now, while focusing on tech rich Nasdaq stocks like Google, FB, Amazon, that benefited from COVID 19 lock down measures as a shift in human behavior plus social distancing is changing the way we go about our lives.
So to answer the question should we wait or buy shares now? This is not any financial advise, nor am I an advisor. But my personal experience, I would shortlist a list of companies that I feel are good value, mainly cash rich with less debt as we know they will emerge stronger in the long run. Then allocating 10-20% of my funds to purchase them. The reason is to make sure I do not miss the boat if the skies are blue and if the market decides to bottom out again, I would have enough dry powder to purchase more at a lower rate.
Overall, if you look at how the market reacted on March 23, 2020, everything will drop during a crash no matter how good your company is. So since we cant predict the future, lets just prepare for it with spare dry powder to take advantage of the situation when it appears.
Question: Do you think commercial reits will be affected with this new change? Whats your thoughts, drop a comment