It is not exactly news anymore that the stock market has had quite a tough week. The most obvious factors here are the COVID-19 pandemic, and the oil price war between Russia and Saudi Arabia. With all of this international turmoil afoot, we have seen multiple historic plunges in the market. The public is taking this in many different ways, but one “insider” tip floating around is that you should actually buy stock now, despite the apparent bear market. In this article, we will be breaking down whether or not that is a good idea. So, should you buy stock now?
Total Crash, or Temporary Setback?
The answer to whether or not you should invest now is largely based on the answer to this question. The idea that one should buy now is predicated on the idea that this is a setback caused by a climate of panic that will subside eventually; I find myself inclined to agree. While this very well could be the “crash” some economists warned about while the Trump-era market began to explode in value, it seems much more closely tied to tangible events. The coronavirus had a massive effect on manufacturing supply chains from the get-go, and it hasn’t exactly slowed down. As it spreads through the rest of the world, imports and exports will be impeded. The market has responded, and it doesn’t like what it sees right now. Alongside this, Russia and Saudi Arabia started a price war on oil. While this will help consumers at the pump, it has affected the value of Big Oil stock prices, as they will probably be forced to diminish margins by competing in a similar way. While these events are huge, their effects will most likely subside over time. With unsustainable losses of around 50% in certain industries like air travel, one can definitely take advantage of the eventual rebound.
Should Everyone Invest?
Nope. If you didn’t already have money to invest, you don’t suddenly have it now. While it seems likely that some serious gains are to be had, you shouldn’t bet all your savings on it. There are no guarantees with the stock market, so don’t be hasty or irresponsible. The risk of missing out is far inferior to the risk of losing half of your savings if these values continue to tumble. Especially with the risk of medical bills and missing work, you don’t want to dry out your safety net right now.
It depends. With that fence-sitting, safe answer out of the way, I would say that it is generally a good time to buy stock. While I wouldn’t recommend anybody who didn’t have the money to invest before to invest now, it is a great time for you to throw some of your extra cash into the market. Be responsible, and only part ways with money you are okay with never seeing again. Expect to have to hold on for a long time, and see what you can make of all this pandemonium.