bookmark_borderHas the S&P 500 Really Bottomed? Maybe.. Maybe Not.

Stock Market
The S&P 500

Good afternoon and welcome to, if you have been watching the stock market for the past few weeks you have probably noticed just how volatile stocks have been, one day we get bad news and the stock market goes up, the next day we get good news and stocks go down… if you are a day trader this is heaven since volatility brings opportunities to make money, however if you are a long term investor it can be painful to see your stock market portfolio go up and down.

The question is, do you think we have finally hit the bottom and is it safe to invest in stocks right now? Well the answer to that is that nobody really knows and as everybody will tell you, I am not a financial adviser and you should do your own research before buying stocks, however there are several clues that will allow us to make decisions and to invest so we can all make money.

This article from Seeking Alpha got me thinking if this is really truth or not:

Start Investing in the Stock Market Today

Now, before we continue I wanted to ask you if you already are invested in the stock market, if you are interested in investing in stocks and etf’s I recommend that you use the Robinhood app, as always make sure that you understand in what you are investing and do it at your own risk, however I do like the app and I use it all the time, if you sign up with my link I get a free share of a company that they chose and you will get a free stock as well, you can sign up for the Robinhood app here.

Has the stock market bottomed?

So here is my personal opinion, as you might have noticed, when the news about COVID-19 were announced, the stock market plummeted very fast, for almost 3 weeks every single stock kept on dropping and hitting new lows, the drop was so fast and aggressive that I personally was down over 60% in my portfolio, this is coming from someone who has a relative safe, blue chip dividend portfolio. The drop continued and even though things have moved sideways I am still down 30% so even though people say that the stock market has been going up the reality is that the market is slowly reacting to the news, good or bad.

In this case, what I am actually doing is being very careful how I deploy my capital, I have been averaging down on stocks that I believe will go up in the next few months and I am collecting dividends as well, I am only buying stocks when things go even lower and on days that the stocks rally I do not buy any stocks at all to protect myself from new lows.

Another strategy that I have implemented is day trading stocks in small amounts, by the end of the day my position is cash and I analyze the stock the next day to find a good entry and exit point, so far I have traded companies like $UNH, $MSFT and $AAPL. I only trade stocks that are underpriced and take profits on the daily basis.

Now, as I mentioned before, it is possible that the market could go lower however what I believe will happen is that the market will stay flat for at least a couple of quarters, it will take several months of profit growth for the stock market to start seeing highs again, while this happens I highly recommend that you either swing or day trade or invest and collect dividends.

What To Do If The Markets Go Lower

Bottom line is, the stock market can be very unpredictable and it is very hard to predict if stocks will go up or down, all we can do is analyse and speculate, however it never hurts to have a plan and take action. First of all I always make sure to have an emergency fund and cash, that way I am not forced to sell stocks at a loss. I rarely sell stocks at a loss and the reason why I can do that is because I do not invest every single dollar that I have, I usually allocate an amount of money for a rainy day.

With this in mind there are 2 things that you can do if stocks go lower. The first is to wait and be patient… it is as simple as that. If the fundamentals are there for the stocks that you picked then all you have to do is wait and be patient, your stock will go up sooner or later and you will be able to make money.

If you do not want to invest additional cash the second thing that you can do is sell stocks that have gone really high and re-invest that money in the stocks that are much lower, this will allow you to average down and make money once the stock recovers.

I hope this information was useful to you, if you like this article please share it with your friends and family and please make sure to bookmark and come back for more soon.

If you are not invested in the markets and want to start today, open your Robinhood account today and get a free stock, link below:

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