Welcome to the correction!
A friendly reminder that red days exist
What a start to the week!
For those wondering why markets are in deep red territory today, Tech stocks are being sold off as it looks more likely that interest rates are going to increase soon, meaning present value of future money will decrease, meaning the high growth tech stocks hinged on making lots in the future become slightly less attractive propositions.
what does that actually mean? It means that markets don’t rise forever and everyday, and stocks are not a free money printer. There are risks.
Is this the end of the world? will the stock market crash and burn with no recovery in sight? probably not, corrections are healthy as they bring a level of rational pricing back to the stock market.
There is a famous saying to keep in mind during times like this: “Bulls make money, Bears make money, but pigs get slaughtered”
Pigs: Noun, plural
Pigs are investors whose goal is to make the most amount of money in the shortest amount of time. Piggish investors are known to either take on high degrees of risk or overlook risk in order to make a profit. They often make rash investment decisions and buy stocks without doing their proper due diligence. As a result, they tend to lose money, hence the adage that they inevitably get slaughtered. While bullish and bearish investors may have opposite investing styles, they each have the potential to make money if they manage to time the market correctly. Pigs, by contrast, are the most likely to lose money no matter the shape of the market because of their greedy attitude.
The biggest lesson to learn from all this?
Do not treat investing like gambling, it is not a “get rich quick scheme“, please only invest what you are comfortable losing and will not need immediately, and always do your own research.
With all that being said, there are some bargains that can be had during corrections, as stock prices drop and some become good opportunities, the best buyers operate during market turmoils.
Stay tuned for more DD later in the week.
if you enjoyed this, why not subscribe?