Is now the time to buy equities?
April 14, 2022
'Be brave when others are fearful.’
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. —Winston Churchill
Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble – Warren Buffett
Are we seeing opportunity now? Possibly. Stocks are under pressure for many reasons, but maybe it’s time to be an optimist!
As traders ourselves, we have to be optimists, or we would never make any money at all.
The world is full of noise, and deciphering that noise is important. If you look at the world as a whole and you listen to geopolitical updates, only very rarely is there any ‘good news’.
However, if you look at global economics, and corporate earnings, we can often find good news in the numbers, and it is very important to not let one, cloud the other.
Right now, the two are slightly intertwined as a ‘war’, and that’s what this is, does affect the global economy.
"Using a global economic simulation model, the secretariat projects that the crisis could lower global GDP growth by 0.7 to 1.3 percentage points, bringing growth to somewhere between 3.1 percent and 3.7 percent for 2022," the WTO said.
That is indeed a blow, but growth is still projected to be around 3.5% for the year which is actually still slightly above average for the last 20.
Investments need to be thought of within the context of long term growth. Warren Buffett once said:
“Successful Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.”
The point of these quotations is show the powerful tailwind of economic progress that pushes stable businesses to ever greater heights. Buffett recommends that investors capture this economic progress by owning S&P 500 stocks through low-cost index funds.
If you had done nothing but invested in the S&P500 for the last 10 years your current return over that period is around 221%.
At TPP we often speak to people who are interested in short term, fast money. Yes, we can sometimes make money very quickly if the timing is right, but The Portfolio Platform was not built as a ‘get rich quick’ investment platform.
Day trading, as we have said many times, is not a good strategy for a profitable portfolio, especially in a volatile climate like the current one, so we encourage our traders not to do it.
When things are uncertain, long term views are the only way forward.
Over the years, Warren Buffett has given us many investment tips, but our personal favourite at TPP is ‘be fearful when others are greedy, and greedy when others are fearful’
You pay a price for stocks in the market, and if others are fearful, that price will be lower; if you believe that price will be higher in years to come, then buy it when it’s cheap, not when it’s expensive.
We find nothing more fearful than buying into a market that is already high. We need corrections like the one we’ve seen in order to get value back into the market.
You should take full advantage of opportunities when they do come. If the markets are discounted, buy in and step back.
Pick your investment wisely, and then give it time to work. Perhaps it is time to put out the bucket and not the thimble.
“In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a fly epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
At some point, the world will recover from the current shock, and GDP will increase, as will corporate earnings. If you wait until that starts to happen, there is a good chance you have already missed it.
If you would like to add build a TPP portfolio and add a leveraged index tracker to your portfolio, please do contact our team. You can very quickly and easily link any index from around the world, and let it do its job.
Please contact our team here
TPP traders and trading teams are tasked with yielding 2-4 x market performance per annum, and over the last 2 years have delivered on this. Will they be able to repeat this in 2022? Is now the time to build your portfolio?
“TPP might just be about to revolutionise investment for the retail market.”
- London Stock Exchange 2020