The Stock Market: Managing Money in Uncertain Times
Hollywood has consistently portrayed the stock market as a daunting monolith that only the most mentally skilled can even attempt to cover. Movies, photos, and all forms of media depict a stock portfolio as something reserved for the one percent or those managing money that belongs to the one percent. These drastic portrayals could not be further from the truth. The financial markets can be easily utilized by the average person; it simply is a matter of common sense, research, and willingness to take a risk with some amount of money. Believe it or not, some of the wealthiest people in history, like Warren Buffett, have made millions, if not billions, in the stock market without starting as anything more than another average Joe. And now, with a global pandemic bearing down on us, is the prime time to begin investing in the stock market.
The market has been in mass flux since the outbreak of COVID-19, largely due to the halting of manufacturing in China and the stoppage of in-person business around the globe. Share prices have reached all-time lows, for some companies, yet others have reached all-time highs. Resulting market volatility has, as such, reached unprecedented levels. For short-term trading, such as option contracts or day trades, the rapid shifts of prices have created an unparalleled opportunity to make vast sums of money over the course of days or weeks. The downside, however, is that it has become even more possible to lose equally large sums of money in just as little time. Between option trading and day trading, getting involved in option contracts is a slightly safer play, although it requires far more research on predicted growth than the latter. That said, this form of investing takes a bit more patience than the alternative, which typically spans the course of a few hours, rather than a few weeks.
Market fluctuations have been of great benefit to long-term trading as well. The sharp decline in most manufactured good companies' share values has caused a great investment opportunity to take advantage of. Guaranteed growth stocks like the airline industry, entertainment industry, and energy sector were all hit relatively hard by the pandemic, although few of the companies within each sector are in any danger of going under. The benefit of these heavily devalued stocks is that they stand to receive a huge, undeterred growth period once the world begins to make a recovery from the virus currently afflicting it. Stocks worth a single dollar now stand to return to their previous state at five, ten, or even twenty times the value over the course of the next three years, and this same philosophy applies to stocks of any value in these sectors. The key to choosing these stocks lies in the research. Market cap, chart history, and quarterly financial details all provide crucial insights into the future of the company and its stock prices, so the research process is vital to selecting stocks that will create high-value returns in a relatively short period. The graphic below best explains the benefits of each type of investing, as well as the risk and return possibilities that have been achieved before and can be achieved again.
There are obviously benefits to all forms of investing, it is not difficult to see that much. The high returns that can stem from minute investments make it highly appealing for a fair amount of reasons. Safe investments can return as much as ten or even twelve percent over the course of a year, every year, and risky investments have almost no limit on the returns they can generate, particularly in the options market and on volatile penny stocks. There are no guarantees, of course, and, once again, the research aspect of investing is critical to making money, but there is no denying that there is a huge opportunity with the volatility in parts of the market as well as the huge devaluation of companies sure to bounce back aggressively. The pandemic may be disheartening from a financial perspective–along with every other aspect of life–the reality is that there is a brighter side to it that can be difficult to see at first. And, more importantly, it can be difficult to take advantage of said brighter side even when it does become visible. Like with anything else, however, sticking with investing, learning the ins and outs of the market, and understanding–even if only through common knowledge–that there are evident trends that explain what people will and won't buy or invest in, can lead to a realm of untapped financial success.
