Buying Opportunities When Everyone Is Selling

                             Buying Opportunities Hello my dear friends, I hope you all are doing well .   Today I will discuss when everyon...

 

                     Buying Opportunities

Hello my dear friends, I hope you all are doing well. Today I will discuss when everyone selling in panic, how we use this opportunity for buying.

                         So let's start Investing With Ease.

Guys before getting into the content I want to tell you that, I don't recommend you any specific stocks, mutual funds, cryptocurrency, or any other asset classes. You must do your own research and then invest in any asset.

First, we have to understand normal market cycles, there are short term and long term market cycles. And some other factors that also affect the stock market or any other commodity markets.

Whenever we saw a market crash there are always some big reasons or events like depression, economic collapse, pandemic, and all that. And there are also some small reasons or events that happen in a contiguous fashion and make a big impactful reason for a market collapse like rising inflation, bad economic blunders, any fraud case, etc.

⦿Short Term Market Cycles:

Every single asset category incorporates a boom and bust cycle. We tend to should recognize why an associate degree asset's value goes up or down in the brief term. It's directly coupled with human psychology and emotions like 'FEAR' & 'GREED'.

Whenever we saw a sudden boom in any asset class, it attracts more investors and traders so the market goes up and up, and people intend to make some quick money and when saturation comes in the market then with small falls in the market, it triggers sudden falls.

And in this situation, most people lose money.

⦿Long Term Market Cycles: 

Besides human emotions, there are some macro factors that manage the value of any asset class. These macro factors affect the marketplace for the future. Like once Governments and Central banks of any country cut their interest rates on borrowing cash for long terms, then individuals typically take loans and pay cash, and also the economy grows swimmingly. But the most downside came once these central banks charge the high rate on loans then the market crashed, and as a result of then individuals haven't got the cash flow to pay additional.

The same happens with any quality category, and also the final result's a crash or a depression, we tend to see these sorts of events in past.

I already discussed this thing in a previous blog, so if you wanna see that then click here🠊 How to survive in the Bear Market

As in the previous blog, I told that when the government tightens the COVID-19 relief funds then the market will witness a free fall. That's what happening right now.

We will discuss it in broad, so stay here and enjoy the blog.

⦿ New Investors Roll:

In any asset class, the new investors play a really important role that we can't ignore this factor. In the past time because of COVID, the market had just added huge numbers of new investors. So whenever new money comes into the market, automatically the market goes up and because of that, more investors come in, to make some quick money.

For this scenario, most of the time new investors just buy assets without proper research and they bought cheap things and high prices. They invest money in overvalued stocks, bonds, crypto-currencies, and all other things.

And when the easy money conditions changes or any other circumstances happened, they start selling in panic, and eventually market witnesses a sharp fall in prices.

▶ In recent times, we saw the same things happen in the Indian Stock market, that after FII & FPI started selling Indian retail investors also started selling in panic. As the end result, the overvalued stocks and asset classes crash heavily.

⦿ So do your own research before investing.

⦿ Inflation & Price Hike:

In the last 2 years because of COVID, all the Central banks of countries lower the interest rate of borrowing money, so that common people, companies, and businesses can lend money at lower rates, so that everyone can spend their money easily. This thing is done by the central banks so that the economy can grow smoothly.

But this thing never continues forever, because it causes hyperinflation, price hike, and all other economic problems.

For these reasons now the US Federal Reserve decided to raise bond interest rates. So those who heavily invested in equities, are withdrawing money and now investing in bonds. Because bonds have a lower risk and now with higher returns.

Currently, these are the reasons why markets are falling.

Also, those who are speculating in the market, those people also don't have that much money to hold, so they are also selling at this moment.

⦿ Opportunities:

Almost every stock market index crashed at least 5% to 10%. Some say it's a correction in the market, and some say it is the first step towards a huge crash. But we must remember that every correction or crash is a buying opportunity for long-term investors. Again I am saying for long-term investors.

But some new investors and speculators exited from the market in fear, and human emotions triggers this fall.

So never make emotional decisions on finance, it hurts most of the investors, and never flows with FOMO because everyone had their own goal and you had your own.

➤ So now those who want to invest for a long time and have a long horizon, they must invest in value stocks and better large-cap stocks which are now trading at low prices.

If I list these things in order (For Stocks) then it will be like:

1) Invest in value stocks that have low debt, good ROCE, ROE, whose management has good potential, etc.

2) Invest in those businesses which have the potential for future growth.

3) If you have 100% capital then, 60% of that you must invest via SIP, and the rest 40% hold, and when you think it was available at a cheap price then buy that stock with the holding money.

4) Invest or sell only when you completely believe in your research. Don't invest om FOMO.

These things also apply to other asset classes.

⦿ In a previous blog, I already told the known mistakes that one investor must avoid.

If you want to ready it link given below 🠋

Mistakes in Bull Market

➤➤That is it for today guys. We will see you in the next blog, and I will try to post as fast as I can. Till then bye-bye & happy investing😃😃.

Editor:  Sk Elaf Ahmed.