Capitalizing on People’s Fears

The stock market has lost about 10% of it’s value in 2016 so far. Consider this a 10% discount from what it was before 2016, however timing the discount is nearly impossible. One thing’s for certain, buying a stock now would be better than buying that same stock 19 days ago. One way to ensure you’re getting a discount regardless of how low the market goes is to dollar-cost-average. If you’ve already lost a it in the stock market this year, then most likely your instinct is telling you to sell before it reaches 2008 crash levels. If it does recede further this might be a correct strategy, however very few major news organizations will tell you this. The 2008 crash erased about 50% of stock market value between late 2007 and early 2009, so we still have 40% to go if the crash gets that bad.

One commodity that almost always seems to prosper when stock markets crash is gold. Gold and treasuries. One investment that often gets hit after the stock market is real estate. However, real estate value decline isn’t usually permanent unless you’re talking about a city which becomes deserted like Detroit. You can also make money off of real estate by renting it out – assuming there are renters interested in your location. Other alternatives for the timid include putting the money in a CD, which unless you are holding it for 10 years will give you a measly return less than inflation in many cases. Other uses for money include education, donations, or simply burning to keep the house warm.

My suggestion is to dollar cost average a return to the market, and keep an eye out for severely undervalued investments in the next few weeks or months as the market crashes. If you have investments in relatively unharmed stocks, it might not hurt to sell those and use the money and buy the stocks which will recover the most.