If you have been following the news, you might have read about a story, which is picking up some global attention. If reports are to be believed, China’s state-owned institution like the Chinese Government’s Sovereign Fund and the People’s Bank of China (China’s Central Bank) are picking up major stakes across the world.
In India, the PBoC recently picked up a 1% stake of India’s leading Private-Sector bank, HDFC or Housing Development Finance Corporation. This has set the rumour mills working overtime pointing out some nefarious designs by the Chinese state. However, what most people are not realizing is that the Coronavirus pandemic is a great opportunity to invest in value assets.
The pandemic has led to market crashes, leading to strong assets not presenting their real values. This means that you are getting something great at a strong discount. Rather than looking at it as some weird theory of world domination, people should learn a thing or two from Chinese investors.
In this article, we will look at some reasons, which argue that investing during these times can probably be your best decision yet.
Why we should learn from the financial crisis of 2007-08?
Some of the biggest investors and Hedge Fund Gurus made their highest profits following the 2007-08 market crash. While the entire world plunged into recession, people who bought stocks at the time saw it skyrocket in the next couple of years.
Just to give you an example, if you would have bought stocks of Goldman Sachs in 2008, it would have cost you a little over $80 USD. In 2017, the stock price was $260 USD. This is a more than treble jump on a firm, which nearly winded up operations during the crisis. This is just a small example to show why people should start investing during financial crisis.
There are numerous other instances where the real ‘Bulls’ of the stock market earned millions of dollars after the economy rebounded. The Coronavirus pandemic is one such situation that can replicate the successes of people who earned big in 2007-08.
Should anyone and everyone invest during the crisis?
The short and simple answer to that is NO! Investing in assets where they are nosediving is not for the faint hearted. You buy stocks worth a $100 USD today and can see them go down in value to as low as $5 USD in a week. The market crashing is going to dip in that direction.
However, if you have the appetite for volatility and can ignore the continuous crashing of your stock value, you can try to invest during the Coronavirus pandemic. The key is to in good companies whose prices and values are affected by the crisis. You need to be sure about the real value in their stocks. These are the assets, which bounce back the soonest, as they are safe, secure and have solid foundations.
If you are looking for alternative financial assets, which have been good performers, you can look at investing in cryptocurrency. For the last one year, they are the best performing stocks on the S&P. Even after the crisis, Bitcoin has bounced back nearly 30% to settle at the $7000 USD mark.
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Markets have not crashed for the first time, nor will this be the last time. At every point, we have bounced back harder and investors have created hefty profits. The aim is to play the waiting game and invest on assets, which are the surest to revive after the Coronavirus pandemic. This will secure your investments over a period, and you might emerge with some triple digit percentage profits within five-odd years.