Nice to see some fresh blood on the forum ... welcome! Not so welcome was Friday's bloodbath ... equally unwelcome are the "Market Crash Coming" predictions that pop up whenever I use the internet on my phone.
Unfortunately there's this thing that happens every now and then that a lot of newbies haven't really experienced yet ... it's called losing money.
Don't panic ... now is the time for a little rational 101 investing. This pretty thing with lots of reds and blues in it is called a Chart ... in fact it's the All Ordinaries Chart. Charts talk to you ... they don't listen ... you need to do the listening. I understand this can be a difficult concept, but just for laughs give it a shot anyway.
The first thing it tells us is that from March 2020 until February 2022 the All Ordinaries went from 4429 to 7956 ... a whopping 80% increase in just two years! Plenty of money to be made, and it makes a lot of investors (including yours truly) look a lot better than what they really are.
Secondly, it's had a couple of cracks at the 8,000 mark ... yep, a big scary number ... but it failed to get through. In fact, what we have now is called a Triple Top. This sounds like an ice cream, but if you google "Triple Top" you'll find it's not quite so tasty.
Nothing is certain in the Stock Market, but the probability is that the All Ordinaries is going a bit lower. Yep ... the losing money thing.
Where is it going to? How much money will you lose? Again, nothing is certain, but there are some numbers for you to write down in your little black book ... sorry, showing my age ... chuck these numbers up in the cloud somewhere. God I hope the cloud doesn't Crash one day ... if it does, I guess we can blame China ... either them or Djokovic. The numbers are as follows: 7500, 7200, 6600, 6200 and 5800.
These are called Support Levels. If the All Ordinaries goes below a Support Level ... again no certainty ... there's a good chance it will drop to the next Support Level. Oh dear, that losing money thing.
What to do?
Well, simply put, you need to decide "do I stay in the Market, or do I cash out". Contrary to popular belief, if you cash out you are not a gutless chicken shite ... you are protecting your capital. There's an old saying that goes "Cash Is King" ... read that again ... it doesn't actually say "Cryptocurrency is King". If you have no Capital left, it's game over ... you can't play the game. If you think this can't happen to you, then think of it this way ... if the All Ordinaries drops 1%, and you're playing in the Bargain Basement, chances are you haven't dropped 1% ... the chances are you might have dropped 10%. Then ask yourself this question ... just how many times can you drop 10% and still sleep at night?
Now for the newbies out there, I'll introduce another concept that you don't want to hear. It's called "what are my goals in the Stock Market"? The answer is surprisingly not "to make a million dollars tomorrow", your goals are actually (a) learning how to stay alive in the Market; and (b) learning how to manage a loss. If you can learn how to do those two things, then you're actually building the foundations upon which you can make a million dollars ... or more??? Walk before you run.
If you decide to stay in the Market, I would recommend the Rare Earths and Lithium sectors ... the EV revolution has only just started ... in fact it might be the very thing that prevents Global Markets and Economies from crashing. Try looking for the quality stocks in those sectors ... they should fall a bit less than the other fluff ... and quality will bounce first ... and harder.
Personally I stopped doing short term trading last year, and moved into medium term trading. I'm quite willing to wear a few bruises, in the expectation that I've not only chosen quality fluff that gives me a good chance of making some money, but I'll also have my CGT Discount locked away in my back pocket.
Above all, stay safe and healthy ... especially now that we're getting warned about the "Stealth Omicron" variant ... and maybe invest a little of your time in learning the basics of how to read a Chart
... oh and for those whose only memory of the 'loaf was the dreaded MCG performance, here's a little Paradise for you ...
