The more you learn about investing, the scarier it gets.
I've been reading about stock market bubbles and trading psychology - the Tulipmania of 1636, the South Sea Bubble, the Great Depression, Black Monday 1987, Asian Financial Crisis and the Dot.com Bomb of 2001 - and my god, I've never been more fearful of the present state of things.
We're not just talking about market corrections here, we're talking of stock prices going down for long periods of time. Stock markets are also a leading indicator of economic activity and if the stock market points south, the entire economy is likely to go down as well!
Its easy to pick a winning stock during a bull market, but what happens in a bear market? Every stock is going down and they're all equally likely to keep going down.
Sooner or later, there'll be a major stock market correction. And I need to be prepared.
My investment focus right now is to increase income (for future investments) and protect net wealth against losses. I should look for companies that pay high dividend yields. I should stick the money in the money market or t-bills to protect. Since I am on the lowest tax bracket, I should be earning as much as I can.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment