Should stock investors run for their lives?
Every four years, money and power will have a showdown. October will be a nerve-wrecking month for Americans as the Presidential Election enters into the final leg. There are a lot of uncertainties as to who will be the most powerful person on earth. But regardless the outcome, investors dislike uncertainties. In view of this, should stock investors sell everything and run for their lives?
The US Presidential Election aside, there were already many warning signs of cracks forming in the stock market. In early January 2016, China stock market had two massive melt-downs, leading to forced trading halts by the regulators. Then entered Brexit. Pound experienced free-fall in value and dropped to decades low.
Next on the list may be Deutsche Bank, which has being ordered by US Department of Justice to pay $14 billion for its past practice in mortgage-backed securities that led to the Great Financial Crisis. Many analysts expressed concerns that Deutsche Bank episode could ignite another round of financial crisis but in my opinion, this is unlikely. This is because the German bank is too big to fail and very likely, the EU will bail out the banking giant.
As a wealth builder, it is unproductive to predict when the next economic crisis will arrive because the matter of fact is that no one can predict the future. But we can certainly take concrete actions to future-proof our wealth by diversifying our assets.
In December 2015, the US Fed had announced the first interest rate hikes for many years. Many experts had predicted that there would be at least two more rate hikes this year. In my view, a December rate hike is very likely, given the encouraging employment trend in US for the past year. Many thought that interest rate hikes would cause gold price to drop because of the opportunity cost of holding gold, which does not yield interests.
Nevertheless, gold shocked many investors when it stormed from a low of USD1050 per pounce in December 2015 to USD1258 per ounce in October 2016. This represented an increase of 20% in value! The surge in price made gold one of the best performing assets to hold for wealth builder. You would have made a lot of easy money if you had opened a BullionStar Gold Savings Program since December 2015.
I still believe that investing in stocks is a viable form of wealth building but the risk of me entering the market at this juncture is too high. I don’t want to catch a falling knife and let my money tied up in stocks. Thus, my strategy has been to exit the stock market for the past few years. I have entered the market to buy some stocks like K1 Ventures but didn’t apply the buy and hold approach.
There are experts out there who argued the case for buying Reits or blue chips long term for collecting dividends. I don’t disagree with their views but then there are good times to enter the stock market and there are bad times to enter the market. Ultimately, you must have the holding power to weather the storm. Also, whether the Reit or stock can withstand the storm is another question mark.
Not everyone can afford to lose money in the stock market. Start diversifying your wealth in real assets like gold and silver. With higher returns, there are higher risks of losing your investments. Hence, it is not wise to channel all your funds into the stock market because all it takes is one market correction to wipe out your capital.
Gold and silver bullion allow you to transfer your wealth out of the treacherous financial system and hedge against market uncertainties. In particular, gold can preserve your wealth and protect your purchasing power in the face of inflation or deflation. Thus, many investors view it as a long-term insurance for their wealth.
In Singapore, BullionStar’s Bullion Savings Programs allow you to trade gold and silver online at any point of time. At very low price premium and spread, BullionStar allows you to convert grams in the Bullion Savings Programs (BSPs) to 100g PAMP Cast Bars and 15kg Heraeus Bars. Unlike other bullion savings programs (BSPs) are fully backed by physical precious metals.
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SG Wealth Builder