The stock market has weathered moments of fear, falls and panic over the past decade. But each time, the market came roaring back and set new records, leaving investors to ask why they sold in the first place!
I keep reminding myself of this logic, which is reinforced by many market pundits and financial media outlets. But somehow this time it feels different.
Ongoing War. Rising Inflation. Higher Interest rates. These three factors are what scare me because they don’t seem to be abating anytime soon.
The war in Ukraine is causing unpredictable geopolitical ripples. Inflation seems unlikely to abate anytime soon and the Federal Reserve is ratcheting up interest rates, from decade lows, to fight inflation.
As the market falls, even the mini-rallies seem artificial and provide false hope to may a retail investor.
These macroeconomic factors are concurrently working to move global economies towards a prolonged recession. This is at least what stock markets and a rising US dollar are signaling.
If you think this is temporary and history will repeat then not only is the time to hold, but you should in fact be buying more equities. If not, and this is a long term bear market, then maybe it is time to cash out and head for hills with your money for the next few years.
At this stage, I am not buying any individual stocks and still keeping my regular dollar-cost-averaging (DCA) strategy in place.
And while I have yet to sell some of losing stocks (e.g Paypal or any tech name really), it is painful to watch the ongoing falls.
What are your thoughts?