2020 is finally over. Now the question remains, is 2021 going to be a better stock market year? We can’t look into the future but we can look back at the past. Because in the past we have been beaten up by the stock market a few times. From this we can learn to make this year a better year.
00:00 Beat Up the Stock Market
What can and could we have done in 2020, to get through this year without being beaten up by the stock market. What you need to know is the stock market does NOT represent the economy of course. The economy and unemployment rate are not directly related to the stock market. If the stock market goes up, when the economy isn’t doing so well, that’s possible, and the other way around is also possible.
02:59 What is a bear and bull market
We have two terms. In general we’ve got a way to measure a bear and bull market. Bear market is in which the stock market is declining. When it has fallen 20% from previous peak. This happened back in feb 2020, and the markets fell over 20%. As for the other term, we have something called the Bull market. In a bull market, stocks are climbing, when we call the stock market a bull market when it reaches its low, and then rises for 20%. The interesting part is the moment we are in either of the markets, we can’t really say if we are in a bull or bear market… and that is the next point.
05:33 Where do you stand.
We can’t tell where we are, when we are in the middle of something. Where either in a Bull market or Bear market. We just don’t know with one were in. That’s like being in a dark room, as long as you don’t move around. You won’t know where you are. The moment you start walking or moving around, you’ll walk against something. The same concept applies to stocks. The moment you start looking around, that’s the only way to see what kind of market you are in. The moment you look back, you can tell, where you possibly are.
10:02 Overcome a bear market
In the end you can’t do much, Just know there will always be an end. And talking about ends. Did you know that this bear market of 2020, was the shortest in history? It took only a little more than 1 month. And when you compare this to the history of bear markets. We had another few short ones.
In 2020 we had a crash of 34%. it was not the hardest. But it could have hurt. But if you look back at 2008 with the financial crisis back then we had a loss of 56%. So? Is this 34% that big? Compered to 2008?
13:46 BONUS: Bear markets, what to do?
In my strategy, I always teach my students to evaluate their strategy: How do your stocks perform? Because When a stock market drops, it doesn’t have to be that all stocks drops. This year, stocks like amazon rose immensely because everyone was at home, ordering their stuff. But not only that, for those who do business like DocuSign Inc. in the beginning of 2020 they traded for about 80 dollars per share, currently they’ve gone over the top and are being traded over 240 dollars per share. Just because everyone needs official documents signed, and currently DocuSign offers this possibility. So no matter what market we are in bear or bull. There will always be companies that benefit for the situation.
15:52 One more BONUS. How about stock hunting
The moment I’m bored, and I have some time why not go out and go hunting. I like stock hunting! hunting for dividend stocks are always interesting. What is on sale, and what will perform well over time, but currently is also struck by the current stock market crash. Buy cheap, and hold as long as you can.
17:22 My Reading advice!