Although the stock market had a huge downfall from the pandemic, it has turned into a financial awakening. No one expected markets to rise this quickly since the crisis and it has surprised many investors.
The Standard and Poor’s 500 Index is a major stock index that measures the performance of five-hundred large, publicly-traded companies. Due to Covid-19, it dropped 34% after reaching its peak in February. This left the opportunity to invest at really low prices and that is exactly what many hedge fund managers and knowledgeable investors had done. Investing when the stocks were low paid off since most sectors of the stock market have recovered during the month of August.
Many people have saved big for this rise in the market and are starting to make more money. Business teacher, Mr. Jeff Blude, knows the importance of financial decision making. He says, “The worst thing an investor can do is to pull money out when it is down, ensuring that the money is lost. History tells us that the market will rebound; you just need to ride it out and not react too quickly by selling investments that have lost value.” This can be a key way to prevent yourself from losing money especially during the pandemic.
Understanding this concept may be difficult, but it is key for investors. Although some of investing is based on luck, there are many unique strategies to it. The most important thing to know is that the stock markets always have ups and downs.
To prepare for Covid-19, the best way is to diversify (spread your investments out between many different companies).
Blude states, “Diversifying investments lessens risk for downturns in the market. It is also very important to have an experienced financial planner that knows the market well.” Having this financial planner gives them a vested interest to ensure your money is growing because “most of their fees are set up so that when your investments are doing well, so are theirs”.
The virus impacted many people in different ways, for him, his retirement investments lost about 20% when the pandemic hit the world economy. But goes on to say, “they have recovered and are now up slightly from where they were pre-pandemic.”
Blude says, “I do not invest money into individual stocks but rather into mutual funds.” Mutual funds are large groups of different socks that are “mutually funded” by many investors. These funds are “diversified so there is less risk and managed professionally.” But overall, his investments have increased since Covid hit.
Parent, Scott Wolfe, is an investor who has been involved in the stock market a lot before and after the pandemic. He has experienced not just the recovery of the market, but the major downfall as well. Wolfe has had a lot of success in his stocks, one stock he invested in that helped him out significantly, was Tesla.
He bought it for very low after it dropped nearly 50% in March. After holding the stock for a few months, he sold it at a nearly 300% return rate during August. He said, “I was locked in my house all day, it was a perfect time to invest.” These stocks dropped a lot so it was a perfect time to invest.”
Investing successfully is not easy, you must read lots of data in order to make smart trades. Mrs. Louise Brown, a business teacher said, “ Always check the company’s fundamentals – the income Statement and balance Sheet – before purchasing a stock to be sure the company is in sound financial shape.” In order to make smart trades you must do a lot of research first.