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The stock market is melting and I will keep buying

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Simplify Crypto
@cryptosimplify
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Sadly, It's official! The stock market is in a bear market, with the S&P down near 22 per cent from its highs. And if follow the NASDAQ you are even worst, since it's down around 30 per cent.

This is a new place for a lot of small investors because last year the market was mainly dominated by the bull. That’s why I intend to share my personal perspective on this subject and my steps during these stormy times with a lot of uncertainty (conflict Russia – Ukraine; break of the equilibrium point between supply and demand; China positioning on the war; etc.).

All this has created the conditions for a higher inflation ghost. that now FED is trying to control, increasing the interest rates until the inflation shows stronger signs that are decreasing.

These actions have a direct impact on the company's valuations due to higher debt service and a discounted cash flow factor. This impact is more severely felt on growth stocks where the majority of the cash flow is expected to be in the future and since the discount factor is now higher, then the worth of those future cash flows today is lower with an impact on the intrinsic value foreseen for that company.

Even though in the short term the investors are showing stress and pain, since no one can predict exactly what will happen in the market in the future, it is known that the long-term trend of the market is upwards.

If you don’t believe me, please take look at this chart of the S&P since 1983, where you can see it clearly.

Having this said from my personal perspective, the current market status (and probably the short-term future) appears to me as an exciting opportunity instead of a desperate run to cash out because we can start to find stocks that are deeply unevaluated and add them to my portfolio. In simple terms, my process for working on the stock market is to evaluate the companies in great detail, find out their intrinsic value with my assumption and margin of safety and then start DCA for the defined stocks.

I would like to share with you some food for thought from one of the best investors of all time – Peter Lynch:

  • “When I ran Magellan Fund, the market had 9 declines of 10 per cent or more in those 13 years. I had a perfect record. All 9 times, my fund went down.”

  • “I can't say enough about the fact that earnings are the key to success in investing in stocks. No matter what happens to the market, the earnings will determine the results.”

  • “Almost everybody on this planet has the brain power to make money in the stock market. The question is whether you have the stomach for it and whether you're willing to do a little bit of work? Those are the key elements.”

  • “Every time you have one of these recessions, there are always groups who say it is different this time. We won't get out of this one.”

  • “People spend all this time trying to figure out "What time of the year should I make an investment? When should I invest?" And it's such a waste of time. It's so futile.”

And my two favourites for the current moment are:

  • “My system for over 30 years has been this: When stocks are attractive, you buy them.”

  • “At some point, we will have a major correction and everybody will get scared again, and we will have another buying opportunity.”

Posted Using LeoFinance Beta