You may be thinking that it’s too early to start worrying about a new decline in the stock market because of the recent decline in stocks, but you’d be wrong. Stocks suffer second largest decline in history as VIX extends higher.
I have been saying for some time now that this time is going to be very difficult for the value of the dollar. When one thing goes up, another thing has to go down. The dollar is losing its value.
For example, if you bought the dollar at $100 and it is now down to $90, it means one thing. The value of the dollar has dropped by ten percent. Then what happens when it rises? That means it loses ten percent in value.
Point number two is simple. You lose ten percent of your money by holding dollars, right? If you didn’t realize that, I don’t blame you. Nobody told me until I began to research the markets that the markets were going to continue to lose their value.
The stock market has no value unless you put your money in it. At some point, no matter how much you try to fool yourself, that just won’t do.
The stock market also doesn’t have any value during a business cycle. Remember, stocks lose money during periods of up cycles, so even if you invest now and take a loss when the economy goes down, you can continue to lose money as long as the business cycle continues.
If you take too long in investing, you can get on the wrong side of the curve and get on the other side of the momentum and lose your money on a moment’s notice. In the past, investors and businesspeople alike had had a lot of trouble in predicting the future. But times have changed.
Now you must have due diligence and practice what you preach. Be sure to check out what the analysts are saying before you decide to buy stocks. Don’t take anything they say as gospel truth.
But take every statement with a grain of salt and only buy what you can afford to lose. If you think you know the future and you’re betting on that, then you might want to reconsider.
A wise investment during this economic time would be the prudent financial planning of saving money and putting money in the market. By doing this, you will not only get the returns you are seeking, but you will avoid the risk of high return investments which are just guessing what the business cycle will be like.
Even if you’ve been trading stocks for several years, you may need to rethink your plan because the business cycle is changing at a rapid pace. You may not be able to predict the future and you should not try to because you are in too deep.
This could be a good time to invest in tax-deferred accounts or in real estate because the value of the dollar has declined and it will rise again. And we all know what happens in a gold rush. And that’s what happened before the recession, but if you get in now, you can profit.