In this newsletter we are going to talk about some of the ways that the COVID-19 pandemic has affected the stock market and what we can learn from the pandemic in terms of investment strategy.
In the nearly 2 years since the pandemic started the stock market, while extremely volatile, has gone up around 20%. Why? We have all seen the economic devastation in many industries. How is it that the stock market is thriving? The reason is that human beings in general are very good at adapting. Restaurants have improved their ability to provide take-out, meetings can now to be done online, etc. While some industries might die off due to the pandemic, others have thrived. An example of a thriving industry is online retail.
Our point here is that while some industries have gotten hurt, others have done very well. The economy as a whole is doing fine. The stock market pricing is a prediction of the future economy. The turmoil of the last two years is short term NOT long term economic. In fact, it was very short term.
In regards to the stock market, the big lesson to take from the pandemic is a reminder to stay optimistic. No matter what bad things happen, things will be ok. Stock market crashes are temporary. Therefore, it is important that when disaster happens to stay calm and stick to the plan that you created earlier. In the short term, you might lose money. However, in the long term, you will probably be better off. Knowing that after a crash, the stock market will eventually recover is a core part of our investment strategies. When the stock market falls, we buy more stock. We know that the price cannot differ from the intrinsic value for long, so we take advantage of that. Ultimately the fall is just noise and if you want to have a long and profitable experience in the stock market you need to ignore that noise. /span>
If you have any questions about this newsletter, please call at any time. We sincerely hope you got value from this newsletter. We appreciate your business and trust.
Thank-You,
Daniel and Eli
As we’re writing these to help our readers, we would be very appreciative of any input in regards to what we should write next. If you want us to write about a particular topic, please contact me. Please contact me if you would like to submit a post to our blog.
If anything that we mentioned above interests you, please consider downloading our free e-book. The book contains our thoughts on investment management and some information that we think everyone should know. You can also download it below.
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