Dear readers, yesterday the US stocks markets closed decidedly lower in a sign of a magnitude of volatilities that have not be seen in the stocks markets for a long time. The Dow Jones, S&P 500 and NASDAQ Composite closed 2.05%, 2.57% and 2.61% lower respectively. The reason for the decline in the above US stock indices? Well, the Federal Reserve Chairman Jerome Powell has highlighted the long road to economic recovery ahead, following the central bank’s first 2021 policy meeting. Was yesterday’s performance the start of the crash of the stock markets?
Well, volatilities like yesterday US stocks markets performance are expected from time to time just that declines of over 2% have not been seen for really quite a while so it is natural that investors may be worried. As you would have known by now reading from what I shared here on SG Stocks Investing, my view is that there are really quite a number of factors right now in this Covid-19 background that can set off stock markets south, so always be prepared for the eventuality of stocks markets crashing whether you are about to invest now or are holding your investment portfolio.
And then that is always the view to the effect that stocks markets have not corrected for more than a decade and that it seems timely now that a crash to the stock markets is coming. There is no rocket science to the performance of the stock markets. Stock buying and selling are all done by investors and the most often emotions driving investors are greed and fear.
That is why, right now at the beginning of this year, it is good to take a look at your portfolio to review how many percentage of your portfolio actually goes into equities and how many goes into cash. While cash is now not attractive, cash is King when the stock markets correct and many investors are fleeing. So, do not underestimate the power of cash. Create or build a bigger investment warchest today!
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