If you've been an investor for the last couple of months, you may have noticed falling stocks and prices all across the board. Much of the world economy has felt the impacts from many factors like inflation, post-pandemic overhang, and the Russian invasion of Ukraine, and the stock market has been no different. However, despite the grim outlook of falling investments, William Moroney with Synergy Financial says there is no reason to panic.
"This too shall pass, there are forces that a lot of us don't understand with regards to inflation and all these other things, but we will work it out. We always do. We always figure out a way, governments figure out a way, companies figure out a way, and the good companies figure out a way to make more money and they come out of this more resilient, stronger, more nimble, and better better positioned," he said.
Moroney explained if you have a broadly based portfolio of equities, bonds, and fixed income securities, you should have confidence in the market rebounding. But where does this confidence come from? For one, Moroney said historically investment crashes rebound almost every time, and if you think about it logically, big companies like Apple or Coca-Cola aren't going to disappear. While their stock may be low now, it'll pick up again over time.
"A company like General Electric or Johnson and Johnson, they've got lots of products, right? Six months ago their value was 'X' and now it's valued at less than 'X' and people are going 'Oh, that's not good.' And it's like, 'do you really think that the company is going to be going away?' It's not intuitive that all of a sudden that company is going to go away. There are arguments that other companies might not make it through, but if you look at it from a broad market perspective and say the market in general, there's thousands of companies in the market and not all of them are going to go away."
Not only does Moroney have confidence in investments rebounding, he says now is actually the best time to invest if you have the cash to do so. Moroney compared it to a sale on jeans, where normally if you have a product like jeans on sale, you may buy more because it's good value. He says stocks and investments work the same way, and if you're able to buy low now, you could enjoy potential big gains once things pick up again.
"The stock market in my mind is the only market that when things are on sale people don't want to buy it. But when things are overpriced, when the value is overpriced people are willing to buy more. It doesn't make sense, it's not intuitive. It's the only thing in my mind that people are counter intuitive when they're buying equities."
While there's no way to predict when exactly the turnaround will come, Moroney is fully confident brighter days are ahead.
"Every time something like this occurs, when you come out of these low points, the increase coming out of the low point is the best time to be in the market, not out of the market, right? Weather the storm; when the storm passes, you're going to have smooth waters and you're going to sail through this and you're going to rise higher than you were before, and that generally is what happened. 9/10 times over the last 75-80 years."
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