Smart investor, Ray Dalio has compared 1937 vs 2020 market cycles (you may google for more), many good insights to show the similarities (eg. share prices went up over 300% for both cycles as shown in chart above). Here are my additional views, different from or similar to other analysts:
1) 1937 crisis did not really took 17 years to recover (unless counted from peak to peak), there were actually 2 market cycles in between, about 8-9 in each cycle, quote comparable with last few decades of market cycle. Global financial crisis is scary but typically it should not last more than 1 decade long.
2) Owning gold would not help much, especially buying gold at higher price or even at fair price because gold won’t be able generate income, simply a tool to preserve its value. However, buying gold at low optimism price (eg < $800 which is undervalue) would help in long term but it may not be required (property could also hedge against inflation)
3) Buy dividend stocks to fight against crisis should not be the main strategy, has to be combined with other considerations. Capital gains, dividend and business fundamental are closely related. A smart investor would not focus in dividend alone, also need to pay attention to potential capital loss (eg, when holding a stock through a bear market).
4) Agree that cash is king when used at the right time. Knowledge of market is important to buy low but knowledge of fundamental is important to avoid buy low get lower.
Market cycle ending 1937 may not be exactly the same as 2020 as exact history may not repeat itself. However, greed and fear would repeat itself as investors 100 years ago were also human who care about the hard earn money.
However, smart investors need to take proactive actions, eg:
A1) Do spring cleaning, take profits or cut losses, converting to more cash as future opportunity fund.
A2) Prepare for dream team portfolio with at least 10 giant stocks for diversification. Know What to Buy, When to Buy / Sell
A3) Train up oneself, aligning the investment strategies with own unique personality, so that one would execute actions A1 & A2.
An integrated approach would help, eg LOFTP strategies (Levels 1-4, Optimism, Fundamental, Technical & Personal Analysis). Opportunities are for those who are prepared! Interested readers may hear 2020 Stock Market Outlook in free 4hr stock investment course by Dr Tee. Register Here: www.ein55.com
