Monday, October 13, 2008

Global Market Rout? What Action to take? Opportunity of a lifetime?

Sub prime crisis, global stock crash, black Friday, global credit crunch......; I am sure you have read all the bad news last week! It was black October for many stock investors as the market falls significantly last week. Is this the end or beginning of an opportunity? The answer depends on your risk profile. If you are about to retire now or need to take out your money from the stock market now, then you stand to lose a lot. If you have investment horizon of at least 2 to 3 years then your risk of losing money will be very much lower. Yes, the stock market has gone down quite a lot this year, money is out from the investors pocket but where are the winners? The money has to be with these people and will definitely finds its’ way back to the investment market sooner or later. Investor’s sentiment today is the same as in 1974, 1989 and 2003. But look, what happened after all the great bears market; the equity market actually moved to record high. Over the last 60 years there are 13 bear markets with the average length of 13 months and average fall of 29%. But there are also 13 bull market with the average length of 3 years and an average gain of over 90%. If you have investment in some good equity stock, you can gradually average it down by buying whenever the market dips. Its’ time to invest more into the market! Related post on Investment

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