Trade The Journey

Trade The Journey

View from the Sideline!

Hoping that everyone is safe and in good health.

 

Its been almost a month since we began to take the Coronavirus seriously as a country. As a country, we are still divided not only along race/ideological lines but also in economic class. The President has continued to brush off the recommendations by the CDC.

I fear that his prolonged denial regarding the seriousness of the Coronavirus will cost us seriously. An article mentioned that the Coronavirus pandemic would be the defining moment of his Presidency, as was the Vietnam War for Lydon B. Johnson. That’s saying a lot being that last year he was impeached by the House.

Lives in the Vietnam War were unnecessarily lost. Lives are lost as a result of the Coronavirus due to the lack of acknowledgment, denial, and Big business.

What continues to surprise me is the lack of uniformity in our response to the threat of this virus. Some states are enforcing the “stay-at-home” rule, while other states are determined to prove the Coronavirus is a hoax.

The ramifications of the Coronavirus stretch beyond health and has the potential to disrupt the lifestyle we once had permanently. Before the virus, there was a separation between the economy and the government. Now they are intertwined, and the Federal Reserve has extended its reach into public markets.

With a technique called sleight-of-the-hand, you can trick someone by diverting their attention while they focus on what’s in front of them. Usually, you see the method performed in magic shows, but its effectiveness in passing laws and bills has been known to politics for centuries.

 


 

What does this mean for you and me?

To me, it means a change in the way life will resume once the fears and the Coronavirus subside. In my last post, I wrote about the opportunity that can be found amidst a crisis. Unfortunately, the only people who have the cash to take advantage of this opportunity is the wealthy. They scoop up the deals abound in the market; purchasing at prices thought to be impossible only a month ago.

While the middle and low-income classes grasp for air as businesses and companies begin to default, the wealthy become wealthier. The common man receiving a break at some point seems less like reality and more like a fantasy. It’s hard to say when this will change.

When you speak of investing and trading, everyone recommends that now would be the best time to purchase stock. At first, I was offended by the advice offered on the internet. Everyone’s an investor/trader now, and I suppose there’s nothing wrong with that.

But the cold reality of investing/trading is that anyone can do it with the click of a button. Anyone can become rich with the right investment, and you don’t need to devote yourself to years of study to do so. In a sense, people are hoping for a free lunch.

 

A “Free Lunch” is hard to come by in the market because they don’t exist.

The odds more favor despair and loss when you venture into the market where you lack knowledge of value. In this volatile market, it takes an experienced trader to make money because the sentiment varies by the second. These wild swings are not due to fundamentals nor events specific to the company but public opinion.

And the opinion now is that cash is needed, not a return. Who knows what the future holds and how quickly or slowly, the Coronavirus dangers will fade.

What is known is that the economic environment will be shaky for a long time despite what the President is forecasting. Initially, I was restless in my efforts at identifying companies that were selling far below their actual values. There’s a lot of great companies selling at steep discounts.

After regaining my composure, I begin taking my Time in selecting investments and reflecting on different moving parts of the economy. There’s the oil supply/demand crisis, the unprecedented levels of debt in the marketplace, and a global supply crisis afoot, which will ultimately affect demand.

So there’s Time to select quality investments is what I am saying. Take the time to study the Annual report before making a serious investment. In the long term what will really affect a company is its risk factors, management, and cash flow. Everything flows from these variables, so study them well.


Week in Review:

My spending was under control. In times like these, it can be hard to save money to invest, and that’s okay. Apps like Stash and Cashapp are offering fractional share buying. With only $1, you can buy $1 worth of your favorite stock.

It might not seem like much. But with Time, our greatest enemy can be turned into a dear friend through the wonders of compounding.

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