From the history of Taiwan stocks and US stocks and the recent market situation, what kind of predictions can we draw? As long as the investment mentality is correct, no matter the bull market or bear market, you can make money!
The year before, people would meet and say, "Did you buy Taiwan stocks?"
Last year, people would meet and say, "Did you buy U.S. stocks?"
This year, people look at each other with bitter faces, "...how much do you lose?" It is painful to say that it cannot be exported, because the tens of millions of shareholders at home and abroad have become disaster victims as a whole, and what they have earned on their books have been profited back or even negative this year.
What happened in the world of investing? Does the spirit of the past still make sense? Where do the assets in hand go?
This article is only dedicated to you who have recently felt depressed in the field of investment, and reading the whole article will be able to stabilize your body and mind, because you know that we are with you, paying attention to money and its origin.
If you want to skip the middle inference and look directly at the "Zero Anxiety Financial Management 4 Steps" shared in this article, please click on the text hyperlink and go to the conclusion of the last paragraph!
Under the boom of investment and financial management, do you also buy Taiwanese or American stocks and ETFs?
When talking about what we should do now, let us briefly look back at the past, and we will be able to better understand the future...
Taiwan from the second half of 2020 to implement intraday zero-share trading, in the past to buy a stock need to buy one at a time (1,000 shares), for example, if you want to invest in TSMC, you have to buy a hundred thousand yuan, but zero shares can allow us to be A few thousand pieces can be TSMC shareholders.
Therefore, a large number of petty bourgeoisie have poured into the Taiwan stock market, and with the increasing diversification of financial products, the concept of investment has become more popular. At the outbreak of the epidemic in Taiwan, domestic banks developed online services at a high speed, the previous troublesome account opening procedures became fast and good, entering the stock market became so simple, and on the bus, you can see ethnic groups of all ages driving bank stock market Apps to buy and sell.
Photo | Photo by Michael Förtsch on Unsplash
Hot money flowed, Taiwan set off an investment boom, financial YouTuber and Podcaster mushroomed, and received a lot of attention and love, occupying the rankings of major communities, one after another "soaring stock" community was established, people chatted more than a lot of company names.
Interest rates were low at the time, and in the context of inflation, it became "money in the bank will shrink". Since the information of investment and financial management is no longer like the patent of a certain department or industry, not only the mothers who love to talk about stocks in the vegetable market, but also the young people who are accustomed to accepting new knowledge through the Internet have the opportunity to be their own financial advisers.
In addition, investment and financial KOLs found that the United States rose even more, so they made various films to promote U.S. stocks, and how to open an account in the United States, etc. Banks even told you that they could use multiple commissions to help buy U.S. ETFs without learning English, and we saw that Tesla's stock price rushed up to more than 1,000 yuan at that time... So, in the case of lowering the buying and selling threshold, many Taiwanese also invested in U.S. stocks in addition to Taiwan stocks.
Actually, there was nothing wrong with that, because everyone had done it all these years and made money — until the world changed dramatically.
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The world situation and the current situation of the market - people are not afraid of disasters, but they are afraid of unknown disasters
Yes, the world has changed.
The outbreak of the covid-19 novel coronavirus in Wuhan in late 2019, the russian invasion of Ukraine in 2022, the global energy supply shortage, the food crisis, the United Nations report shows that more than 800 million people affected by hunger worldwide [1];
In June 2022 of the same year, the Federal Reserve raised interest rates sharply and continuously, Japan was stabbed to death for the first time, the country Sri Lanka declared bankruptcy, the US car loan loan increased, and China's rotten tail building storm...
The market is moving extremely fast, and even the editor wrote the article in July, when there was big news: on the 12th, Taiwan announced that the national security fund would enter the market, and on the 13th, the United States announced that the consumer price index (CPI) rose by 9.1% per year in June, the largest increase in more than 40 years. The higher-than-expected inflation rate has led the market to expect the next rate hike to be higher.
Even a miserable cryptocurrency, after falling into the dark abyss, has gained 20% in just a few days in recent days, making it impossible to tell whether it is a bear market precursor or a flash in the pan.
Under all kinds of violent changes, the investor's heart also followed seven up and eight down, the mood was extremely tense, and there was no time to relax.
In the two years since the beginning of the epidemic, our lives have been seriously affected, many people have difficulties in their livelihoods, if even the investment is lost, what will we do in the future?
In fact, what people are afraid of is not disaster, but unknown disaster. As long as you can predict the possible situation, even if you are pessimistic, you can feel more at ease.
Before thinking about the next step, maybe we can go through history and see what happened.
Photo | Photo by Blaz Photo on Unsplash
From the stock market bubble and prosperity in the United States and Taiwan, we can see the economic cycle
Since the global financial tsunami in 2008, the Federal Reserve of the US central banking system (US Federal Reserve Council) has pressed US interest rates in the almost lowest range (0-0.25%) for nine years, and then COVID-19 broke out, in order to save the economy, so the pace of slow interest rate hikes was cut instantaneously, maintaining market heat, until last month (June 2022) in order to suppress excessive inflation and rapidly raise interest rates, bringing another blow to people who have panicked.
Pictures | MacroMicro.me
The rise in US interest rates over the past decade looks overwhelming, but from the chart above, we can see that interest rate fluctuations were once more exaggerated than they are now.
The fact that U.S. stocks or the Dow Jones Industrial Index have bottomed out is by no means the first time, and here are a few historical events that you must have heard:
The Great Depression of the 1930s (a quarter of the population was unemployed), World War I, World War II, the Korean War, the Vietnam War, the 123 oil crises, the 9/11 incident in 2001, the subprime mortgage crisis of 2008 and the bankruptcy of Lehman Brothers... all contributed to a 20-42% decline in investment. [2]
(Editor's note: If you don't want to read history, you can click on the "Zero Anxiety Financial Management 4 Steps" text hyperlink to quickly go to the conclusion of the last paragraph.) ）
Photo | Photo by Samson on Unsplash
The U.S. economy has changed dramatically many times, and the scale of wars at the global level has a greater impact, and throughout history, Taiwan is actually the same.
Taiwan's weighted stock price index, which peaked at 18,619 in early January 2022, recently fell to a panicked 14,438 (calculated on July 14), but if we search the history of Taiwan stocks, we can see the most famous stock market bubble , the 1990 Taiwan stock price price collapsed from a high of 12,682 to 2,485 in eight months.
If you have experience buying and selling stocks, did the decline thirty years ago chill your heart? The bubble wasn't far away, and if you're a reader in your 20s and 40s, we're just going through something our parents did once — and they might be worse.
Does history make us realize that stock market crashes have always existed? The economic situation will always be better for a few years, and then a few years worse, and so on, like a living organism.
The history of the stock market crash is finished, and then what? Experiential learning makes you rich
So back to the topic that readers are most concerned about: how do we manage money, how do we get rich?
First, start learning! Because the knowledge and experience in your head will never be taken away, you will be able to develop the most suitable way to make money for yourself.
It is easy to become leeks because the market changes really fast. When we lament the rapid progress of science and technology and the new functions of mobile phones every year, we can't expect to invest in buying a piece of land like thirty years ago and making a lot of money, often not buying/selling at the moment, and soaring/plummeting in a few days to show you!
In the book "Getting Rich Mentality" of Eslite's 2021 Sales Champion of the Year, there is a picture as follows, I want to invite readers to spend 1 minute looking at the picture to think, can you see your own conclusion?
Interpretation:
- This chart shows the Dow Jones Industrial Index from 1950 to 2019
- The grey range in the chart refers to a period when the index is down at least 5% from the previous wave highs [3].
Image | book The Rich Mindset, p. 209
To put it simply, whether individual stock companies can survive or not, the market will certainly be able to grow and climb upwards over time, because this is based on the result of the financial system created by the world, and a bowl of beef noodles will not become cheaper, but will become more and more expensive.
Inflation is a necessity in this world, and the problem is that wages do not grow and prices rise too fast.
Even if there are historical events that have seriously affected the economy, it is only temporary for prices, and even we can see that there are more "gray ranges" than white ranges, which means that most of the time, investors have to endure this "pain of falling", but in the long run, investment will show positive feedback.
What should I do if I lose money on investment failure? Examine the 4 mindsets of zero-anxiety financial management and seize the opportunity to get rich
1. Think about why you invested in this thing in the first place
No matter what we're investing in, maybe fixed deposits, insurance, treasuries, real estate, funds, stocks, cryptocurrencies, luxury goods, art, NFTs, etc., at "any moment" we can think about it – why invest in it in the first place?
As the world situation changes, or the flow of money on our hands increases or decreases, the investment strategy we formulated must also need to be "rolling correction".
If you just want to follow the trend, or if a friend recommends that you buy it - then this is the time of "re-examination"!
2. The mentality is also divided into short-term or long-term
In the 2008 financial tsunami, it took the market about a decade to return to its original state, so you can think about whether your asset allocation can wait for a decade. Is the planning long-term or short-term? Where can the water level of your own investment go?
Commodities of different lengths naturally have different rewards, usually high-risk high-reward, low-risk low-pay.
If you find that you are not suitable for short-term high-risk investment, it means that you have learned more about your risk tolerance through learning, and then adjust and allocate.
Photo | Photo by Fast & Slow on PIXTA
3. The investment that can sleep well is the investment that is most suitable for you
If the asset allocation in hand makes us restless, sleepless at night, wake up in the middle of the night to watch the news, and go to work and can't concentrate on doing things... then maybe we should consider:
- Sell at odds and invest in less risky commodities
- Sell part of the position to diversify investment and risk
- Judge the prospects and decide on long-term investments
Those who lose money are not wasted, as long as there is experience in absorption. Suitable investment methods can not be in place in one step, only continuous attempts, in order to find the most suitable way for themselves!
The investment that can give you a good night's sleep is your investment holy grail!
4. Investing in yourself is the only way to make sure you don't lose money
Bull market when everyone is an investment master, bear market face is green like leeks, if you want to improper leeks are harvested, the only way to improve their own financial knowledge and risk awareness, otherwise earned by luck, one day will rely on strength to lose back.
As discussed earlier, the world is now at a low ebb – can the pandemic be defeated? Will the war end? Can the food crisis survive? We mortals cannot be 100% sure, but history can lend us a mirror.
So, while whining about asset gains and losses, please also pick up the spirit, learn from each experience, continue to develop the next better strategy, and turn yourself into the strongest cash flow!
The meaning of regret lies in experiential learning and remembering to do the most correct thing in the moment. Don't regret it for too long, you and I are still long.
When we are in the midst of disaster, we look at it with despair, but in hindsight, those moments are also a godsend.
If it comes to the day of the god-given opportunity, I hope that you and I will be able to seize the opportunity to get rich.