Fellow readers and investors, I missed discussing with you. As you likely know, the stock market has been “tanking” the last 2 weeks. I hope you have not been affected by it.
These last two weeks have been stressful and scary. Before I started investing, I heard that in order to invest in individual stocks, you need to be able to stomach the unrealized losses. Well, I didn’t believe it and didn’t know how it felt, until this week. My portfolio was doing well since I had about 10-12% in REITs, but as you have seen REITs are getting slammed as well. I was up to 6.5% vs the market’s 7%. And from there it went downhill.
Ultimately, these drastic drops in the stock market might have happened due to a few reasons.
- The coronavirus outbreak
- Bernie Sanders doing well in the U.S. primaries
It’s difficult to say that the drop in the market is not related to the coronavirus. Of course it is related to the coronavirus (share your thoughts if you think otherwise). In China, movement was prohibited and therefore many people were not able to work. That resulted in revenues decreasing and many others believe it will have impact on the rest of 2020.
Bernie Sanders is doing well in the U.S. primary election polls. He seems to be leading on the Democratic side. And Trump has manipulated the media and the American people into thinking that he was responsible for the significant increase in the stock market over the last few years. His unfair tax plan which decreased taxes for corporations helped them have more cash to buyback their shares…these buybacks are one of the reasons for the bubble (more on this in another article). Anyways, since Trump is associated with market “success” and Sanders plans on breaking up big corporations, people are associating Sanders with a decreased or weakened market. Perhaps investors are pricing in a correction for if Sanders gets elected.
Overall, this is an overreaction due to coronavirus and other political factors. I am not saying coronavirus is not an issue. I have learned that the market is highly emotional and I plan on being more prepared in the near future.
Here are my returns for my portfolio. Before this, I was almost beating the market (me: 6.4% vs market: 7%)
I predict that when the first case of someone dieing in the U.S. from coronavirus happens, the market will drop significantly in that week.
Will the 2020 Olympics in Tokyo get cancelled? Could the coronavirus still be an issue until 2022 for the World Cup?
Did you hear about the 23-year old that was hired by the Trump administration?
I hope the situation in China gets better. Let me know what you think…