Updated: February 26, 2020
Global markets have been like a rollercoaster for the past several weeks.
After the initial downturn because of the coronavirus or COVID 19, markets had been recovering for 2 weeks. However, the end of last week saw prices turned red yet again.
Last February 24 was bloody, all major markets opened and closed negative. While we won’t go into much details, it’s basically still because of the global health threat brought by COVID 19.
One can still make money by short selling during these times, some traders understandably got spooked upon seeing these.
Major tech stocks, who were considered infallible at one point, were also hammered.
So what can we do about this?
Whenever equities get hammered, while it doesn’t happen often, other forms of financial instruments can be traded or used instead. This is really where diversification shines.
Many consider Gold as a safe haven. And in fact, Gold made prominent gains in prices in the aftermath of the 9-11 attacks, and then again during Lehman Brothers’ fall in 2008.
Since last week, Gold has been trending higher and higher due to investors fearing too much exposure to stocks could drive their portfolios down.
Gold now is trading at is highest point since 2013. Another consideration is that interest rates are low, so people have more cash to put into gold.
Trading Gold itself may be too expensive for some investors though, and the entry barriers may be a problem.
For this, you may want to consider gold ETFs instead. There are a number of ETFs or exchange traded funds, which track the price of gold and are also affected by gold supply and demand.
SPDR’s Gold, VanEck Vectors’ Gold Miners and Junior Gold Miners can be an option:
FIXED INCOME INSTRUMENTS / BONDS
Bonds are viewed as a safer haven than Gold because they are less risky, particularly US government bonds.
As a quick refresher, if you buy US government bonds, you are essentially lending money to the US government, and since investors are confident that the US government can pay them back, they are seen as safe.
That’s essentially why when stock markets are experiencing a downturn, investors flock to bonds to safeguard their money.
Bonds compete with investors’ dollars because they are safer, but at the same time, have smaller returns.
In recent times of volatility like the past week, investors have flocked to bonds:
Finally: Warren Buffett’s words
As the markets were trending downward, Warren Buffett was a guest on CNBC last February 24 to discuss his recent letter to investors, as well as give his insights regarding what’s happening.
Warren Buffett said this stock market rout was actually good for his company, Berkshire Hathaway, because it allows them to buy cheaper, saying they “are a net buyer of stocks over time.”
The Sage of Omaha, as he is affectionately called, believes sell-offs like this one are buying opportunities.
He noted that these types of -3% downturns have happened countless times in his 89-year life, and they ultimately turned out to be good opportunities.
He noted: “I can’t think of one [-3% sell-off] you shouldn’t have bought on,” he said. “How can it be bad news unless you have to sell? We certainly won’t be selling.”
Trade and Invest in the Global Market
Are you just investing in the Philippines?
There are opportunities for you to make money in the global markets. Buy US stocks, trade Gold and other commodities, invest in various Exchange Traded Funds and REITS.
Plus, with eToro, you can earn passively through CopyTrader – this feature allows you to automatically copy experts traders and investors, and make money with them through their strategies.
What’s the first step?
Risk Disclaimer and Disclosure:
The content discussed in this post is intended for educational purposes only and should not be considered as an investment advice. Past performance is not an indication of future results. Moreover, eToro is a brand parter of this website.