It’s a big understatement to label today’s investment markets as “uncertain” because with all the significant moves it’s been making in favor of buyers, short-sellers, and long-term investors, it’s been making millionaires just as fast as its margin calling accounts. But what’s caught the most attention is the massive opportunity to secure long-term financial freedom with just one good trade, and while timing the market is contrary to popular advice, there’s no better wave to ride than that of economic recovery.
However, with the sudden surge in newbie investors, it seems that every single one of them is overlooking the threat of market volatility to swing against their position, wiping out their initial capital and putting them in worse shape than they first started. And so, today, we’ll be reviewing the state of the market and how you can exercise investment preparedness just in case something unexpected abruptly decides to go against your market sentiments.
Yes, The Investment Markets Are Scary And You Must Be Vigilant
To answer the initial question, yes, the investment markets’ uncertainty is something to be worried about, especially for newbie investors, because there’s no speculating where it can go from here on out. However, with a bit of vigilance and effort on your part, you can guarantee at least some form of protection against sudden market movements and mitigate the risk of losing too much of your initial investment capital.
#1 Don’t Get Caught In The Hype. Trust Your Research.
We know how alluring some financial newsletters and investment advisors can make one stock, altcoin, and investment opportunity appear to the unsuspecting victim, and while they can work, most often, they fall flat on their face. So, we urge everyone not to get caught in the hype but instead trust your own personal research to guarantee any information you discover. Always reference articles that come from trustworthy sources because what one guy says on an Instagram story doesn’t count as financial advice.
- Crypto Still Showing Bearish Indicators: Although the cryptocurrency markets are known for breaking new highs only to come crashing down just as fast after the momentum ends, the recent bullish momentum works as an excellent example. The sudden bullish drive of Bitcoin and Dogecoin, to name a few, continued to rally upward as more people bought in, but as we’ve seen the past few days, the price for both has come down significantly after the hype ended.
- AMC And The Return Of Meme Stocks: Earlier this year, we saw the rise of Gamestop as a meme stock when retail traders saw an opportunity to buy when it was oversold by hedge funds, resulting in the bullish uptrend after the squeeze was exposed. And today, we are now seeing the same routine play out with AMC as short-sellers were dealt a massive blow after a week-long bullish rally, with even more buying momentum to be expected. However, while the active community behind the buy is inspiring to spectate, always understand that there’s a risk to following these trends without knowing a thing or two about the fundamentals.
#2 Evaluate The Necessary Risk Aversion To Practice
It’s sound investing advice to have a healthy risk appetite to funnel opportunities now and then onto your playing field, but during these trying times that are dictated by uncertainty and volatility, it’s much safer for newbie investors to evaluate the necessary risk aversion. Yes, there’s no denying that a passive approach might not be the most appealing or rewarding of investing strategies, but it is guaranteed financial security.
- Current State Of The Housing Market: Housing supply is low, and prices are soaring sky-high, and while this might seem like a healthy market perfect for selling homes fast, it might also indicate weakness in specific sectors or, worse, the threat of a bubble. So, despite the benefits of diversifying into real estate properties, avoid having too much locked up into mortgages to refrain from taking on the risk of defaulting if a crisis were to spur.
#3 However, Don’t Forego All Risks
Last but not least, while we’ve been singing the praise of choosing a more passive approach and risk aversive methodology to your investing plan this 2021, don’t forego all risks because they also play an integral role in giving you a healthy profit margin. The last thing you want to happen is dropping a missed opportunity that had a manageable amount of risk to go above and beyond your speculation. Plus, it’s recommended that newbie investors understand what a healthy amount of risk feels like and knowing what portion of their capital they can afford to lose.
Overall, despite the economic turbulence that’s causing the markets to move in a very volatile manner, newbie investors can safeguard their capital if they think and invest for the long term. Remember, consistent returns come from staying in the market for more extended periods and not short bursts, so bid your time, and you will reap the benefits later.