In Focus: Don't Miss This Opportunity
It's been a tough few months watching this new strain of the coronavirus wreak havoc on the world. Outside of money markets and supply chains, seeing what it's done to people and families in places like China, South Korea, Italy, and now the United States has been devastating.
I do have faith that this too shall pass. I believe we will get past this case of the coronavirus. I don't know when, but I trust the science community will figure this thing out. I'm more worried that governments won't listen to the science, that is a real concern I have. Over the last 10 to 15 years I've heard science say one thing about topics related to science, while some governments, and others not trained in science say something different.
History has provided evidence that there is a countdown on every great dynasty, civilization, or nation. Ancient Egypt, Ancient Greece, Ancient Rome, Ming Dynasty, on and on and on, they all come to an end. But I don't think this coronavirus is the beginning of the end for the dynasty that is the United States of America. If you feel the same way, then you need to get invested in the markets.
Market pull backs, recessions, bear markets, are opportunities for people who aren't investing to get in the game. If you believe the U.S. will continue to be a world economic leader over the next five to ten years, then it is likely the countries best businesses will also be around during that same time span.
Hindsight is 20/20
If you've ever thought to yourself that you should've invested in Amazon (AMZN) during the great recession when it traded under $100 per share, or in Netflix (NFLX) when it traded under $40 per share (pre 7:1 split), or in Apple (AAPL) at under $100 per share (pre 7:1 split), then this is your time.
Market pull backs, no matter what the catalysts are - credit crisis or coronavirus - provide opportunities that are seized by the smart and the bold, and this one should be seized by you.
I don't know how long this bear market will last, or if the markets will do a V-shaped recovery, a U-shaped recovery, or an L-shaped recovery. What I do know is the way we (as a collective) live our lives will change, and there will be monetary consequences and rewards attributed to those changes.
The iPhone ushered in smartphones as we know them today. Apple released the iPhone in 2007 before the start of the Great Recession. The chart above shows how the smartphone took off after the recession. Before the Great Recession it was all about the Blackberry for those that could afford one. After the recession, Apple's iPhone and the offerings from Samsung and others were what people wanted. iPhone in, Blackberry out.
As the U.S. was exiting the recession the term "cord-cutter" started to gain traction. In 2010 some of the largest cable providers in the nation started to report large numbers of their subscribers leaving.
When coupled, the shift to the iPhone and other smartphones and the rise of the cord cutter put in motion gears that would crank up the money printing machine we call the stock markets.
Smartphones made content consumption available everywhere. YouTube (GOOGL) views saw big increases, Netflix subscriptions increased. Facebook (FB) was no longer a thing people did when they were in front of their PCs. Thanks to the smartphone we could check what was happening on Facebook at any time of the day.
The smartphone also brought the app culture along with it, creating billions of dollars in value for Apple and Google, and millions for smart app creators.
Post Great Recession introduced us to crypto currencies also. Whether you're a fan or not, we saw Bitcoin go from pennies to trading upward of $19,000.
I have no doubt that from the mess that is the coronavirus there will be a new set of opportunities created. Some things that are the norm today will give way to a new norm.
For one, the U.S. has been really slow to adopt tap-and-go pay when compared to the rest of the world. In a time where we are being reminded to not touch our faces and to wash our hands constantly, the last thing we should be doing is touching money, and being able to pay using a phone and or a watch would be of great benefit to me and everyone else.
Another norm that I think will be thoroughly reviewed is business travel. I don't believe we'll be self-quarantining ourselves five years from now. But in the immediate future as companies attempt to keep cost low and survive the current economic slowdown, Zoom (ZM) may go from a thing businesses use, to the number one tool in business communication.
If you've just started investing I don't think you have to sit around and think of all the fundamental changes that will happen in society to see a good return on your investment. Market pull backs like the one we're experiencing now have an impact on the most solid companies. Apple, Microsoft, Amazon, Procter & Gamble, Walmart, and McDonalds to name a few have seen their stock prices fall with the markets. These are companies that are likely to be around five years from now and trading above their current values. An investor doesn't have to be a professional analyst to buy McDonalds and Apple when they are discounted and hold them for the long-term.
Timing is Everything.
When investing in the stock market, a great level of patience can make up for bad timing. But if great analysis, great timing, or great patience were superpowers and I had to choose one, I'd pick great timing. Buying right before the surge up and selling right before the big drop is a power that very few market participants have.
To make up for not having great timing investors can look at what has come before and make an educated guess based on those facts of the past. For instance, a bear market for the Dow lasts on average 206 trading days. That stat suggests that there is no need to go out and buy stocks right now.
As an investor you're likely not going to buy-in at the very bottom or sell-out at the very top, but you can make money in between. If you haven't been blessed with the super power of great timing, then take the nibble approach to investing. Buy small lots of the companies you believe will survive 2020. With so many investment platforms offering commission free trading, buying 10 shares here and there of a quality company is very doable.
An Ugly Opportunity is Still an Opportunity
I strongly believe we'll survive the coronavirus as we have survived everything from the Great Depression to the Great Recession. The current situation we find ourselves in with the coronavirus outbreak has provided an investment opportunity that I'm sure most if not all billionaire investors and multi-billion dollar hedge funds are taking advantage of. You should be taking advantage of it too.
Down markets are where the seeds of fortune are planted. This is your opportunity to plant a few seeds that you and your family can benefit from in the future. Is there a lot of uncertainty out there, yes there is. Is the road ahead clear, not really. But not all opportunity comes when you're ready for it, presented in a Tiffany's box with a perfectly tied bow. Sometimes opportunity gets dropped in your lap at what feels like the worst of times. This is the dropped in the lap at a bad time opportunity, take advantage.