Volatile markets

Pretext

We should all fear the bear. Not the teddy bear that we all used to have as a child, but the one that eats away at our savings, our income, and our returns.

Now for those who don't know what a bear market is. A bear market is simply defined as:

Bear Market

A market in which prices are falling, encouraging selling.

::: right From Google (opens new window)

Now this has actually been happening for the past few weeks. With no end in sight, many people are selling amid this worldwide pandemic. Just on Sunday, the Federal reserves lowered the interest rates to 0%. This means that companies can borrow money essentially for FREE. This did nothing to calm the markets and instead sent it on a even steeper trajectory downwards on monday.

My thoughts

My thoughts in these markets are simple. As more people panic sell, solid companies that are usually overpriced will now become cheap. I can therefore use this as an opportunity and swoop in to buy great companies at a discount.

Just like how the markets rebounded after the great financial crises, the dot-com bubble, or even the great recession. I believe that the markets will rebound again.

Is is very likely that we will see companies start going under. Especially with the recent slowdown in spending; companies will be forced to lay off workers and cut costs. Even the companies that will profit the most from this crisis such as online shops may see a revenue drop simply because people aren't spending as much. However, this will all be temporary.