Post Number: 3139
Posted From: 22.214.171.124
|Posted on Wednesday, January 20, 2021 - 7:02 pm: |
Why I never fear a market crash
1. The number of times market made a full recovery after crash - 100%
2. I am in 30% cash when the market is in bubble. If a crash happens the sectors most affected will lose more than 70-80% of the value. For example- oil stocks, cruises, airlines, entertainment sectors during covid crash. When you deploy your 30% cash in these stocks they will grow 3X-4X because a stock that lost 80% in value makes a full recovery it's a 4X. Sure it will take 1 to 2 years. But 4X in 2 years is fantastic
3. After every crash, there will be a bull market for extended period of time. So your annual returns will be much higher compared to the years before the crash.
But the most important things is you don't invest in companies you don't know. Because some companies go bust during tough times and some may not recover forever. That's why you don't hold garbage in your PF unless it is a small pre-allocated money for gambling purposes