MPower: Don’t Run Away From The Market’s Sale
September 24, 2022
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Well, how about that ride in?
Just days after Fed Chair Jerome Powell’s remarks and post-rate hike, the S&P 500 is headed toward June’s lows.
Amid the bear market, you may have watched your long-term portfolio dwindle down to a mere shadow of its former self. You’re not alone. However, I wanted to offer some reassuring words in the wake of our elevator ride down.
The truth is, no matter how bleak times may seem, our investment journey doesn’t include any rest stops along the way. Meaning, even when times look their darkest, we have to work against the psychological triggers that have us shivering at the idea of putting more money in the market at a time like this.
“Might as well try to catch a falling knife!” some may cry out while reading this.
Though it may seem that way, we certainly aren’t. Take a company like Apple (AAPL), for example… Do any of us think a bump in the economic road is really going to be enough to topple Apple from being one of the greatest businesses ever created? I suspect it would take much more than a typical economic cycle to do that.
The fact is, for those of us who have been saving our cash in order to deploy it during a time like this, now could be a great opportunity to lower our cost averages on some foundational stocks of a balanced portfolio — stocks of companies that have a high probability to make it through this cycle relatively unscathed.
By now, you’ve heard experts giving their opinions on what stocks to buy and which sectors to be in, but the reality is, it doesn’t even have to be that complicated.
The stock market is the only market where when they have a sale, everyone runs away.
As prices across the board decline, investors have an opportunity to go shopping. And stocks aren’t just on sale… it’s practically Black Friday. Investors can look across every sector and decide which they have the most conviction in, either in holding their price now, or that now has the best value for the long term.
The ETFs on the below list all track the performance of the S&P 500, and it can be a good starting point. A little tip for figuring out if a price is cheap or expensive is to cross-reference past prices with current prices to see just how much you are paying in relation to for example, the 52-week low.
You can even diversify further by looking into sector ETFs for a more targeted approach to your shopping spree.
The point is, there’s a sale going on. Let the market play out before you, ready some capital and a watchlist, then once these stocks have pulled back to a price you are comfortable with, slowly start to build a position. Spend this time to lower your costs.
When the inevitable next bull market returns, you will reap the fruits of your disciplined, consistent labor during a difficult time.
Today’s feature: S&P 500 ETFs
