The markets have been shaky for a while now. The last week markets witnessed a sharp due to a combination of many stories – Facebook data usage, tariffs, etc. In my opinion the volatility is here to stay for the next 3-4 months. However, the broader market direction should not change much.
The current market slide presents an opportunity to stack the odds in our favour. It is time to go shopping. Buy the stocks that were too expensive for you earlier, or the stocks that you wanted to have from a long time. The time is now.
As for the economy, I do not think the market forces have changed in the year 2018. The economy is improving, the interest rates are still lower, just not at its lowest point few years ago. It is the political tone from the U.S. President which is making the markets nervous. To add to it, the Chinese came out much more prepared with a detailed list of tariffs on American goods. Result, a blood bath in the equity markets.
This however presents us with an opportunity to buy long term growth stocks that were posting strong returns and are market leaders. This is where we can tilt the odds in our favour. Remember, the key to buying is when everyone else is selling and when there is blood on the streets. Use this opportunity wisely. Be patient. React to the developing trends rather than predicting them.
As for me, I am looking at a few US stocks that have taken a beating. In the process, I may liquidate some of my holdings to generate cash. This may impact my dividend plans for the year. We will find out when the dust settles.
Some stocks to consider:
- Bank of America
- The following three are indices (mainly used for market sentiment and option trading):
- DOWI – Dow Industrials
- IUXX – Nasdaq 100 Index
- SPY – S&P 500 ETF