Opportunity knocks. Everyone knows that markets are down, as inflation and interest rates are up.
While that may seem like a horror and less like an opportunity, for astute investors, those who are prepared to be patient and have faith in the future, there is indeed an opportunity to profit. That opportunity is to plan to invest during this slump – and that should be done by dollar cost averaging.
I have lived and invested through four major market slumps in my lifetime, the fall that we are currently seeing is the fifth. While I was too frightened to invest during the 1987 share market crash, I learned my lesson and invested during the others.
A crash is an opportunity to benefit.
When markets fall and the media are full of negative noise, I find myself almost instinctively falling back on old investing sayings. These sayings often go back a long way in time, and, as such, they bring the wisdom of history.
My prime old investment saying is buy in gloom, sell in boom.
This is a countercyclical idea – buying when others are selling and selling when others are buying is the right thing to do because you are buying cheap and selling dear.
In the early 19th Century, Baron Rothschild had another, more dramatic way of expressing this when he supposedly said that you should buy when there is blood in the streets (he made a fortune investing at the time of the Battle of Waterloo). In saying this, Rothschild was saying that the worse things seem, the better the buying opportunity. (In fact, the full quote from the Baron is thought to be buy when there is blood in the streets, even if the blood is your own!)
Things seem fairly bad at the moment: there is uncertainty regarding inflation and interest rates, China is exerting itself, COVID-19 is still a threat, and there is war in Ukraine. Little wonder that markets have fallen and keep on falling!