As I write this post, the stock of FAANG company Netflix has fallen by 41% since its peak 3 months ago. More headlines are talking about the incoming Market Crash, some even call it the Superbubble. My own personal investments have taken a beating. Bitcoin and Crypto in general is in free-ish fall too.
All this because Inflation is battering people around the globe, and it is time to raise interest rates and stop printing money.
Four ways how investors will behave
#1 Run for their lives and Exit
Many speculators, specially retail investors who got into the market following meme stocks and campaigns by the likes of Robinhood and Zerodha will (or are already) exit the market. They will do this as soon as their favorites start getting crushed. Gamestop or GME is already under 100$ this morning, a third of its momentarily peak in Feb 2021.
Crypto speculators will behave similarly and perhaps even more violently. The swings in Crypto are not for the faint hearted, and memecoins or shitcoins will lead the bleeding.
In short these investors will have chosen the worst time to sell, to save whatever they can, this is where people stop trusting the markets and equate it to gambling.
#2 Cry the wolf
Bears are already sounding alarms, market voices will soon talk about how these special investors predicted the fall. They might have been predicting it for 5 years already and now they will be right. They will get media attention and they will tell us to preserve money in bonds, be ready for pain, and start investing in value companies.
Not necessarily bad advice, but these folks simply will not be able to predict the time and trajectory of recovery.
#3 Be Lazy (like me) and carry on
I’ll keep calm and carry on. Last few years bloggers like myself have enjoyed growth and talked about FIRE. This is the real test, it will separate the ones who follow what they preach. The fact is market may still recover without a crash and my continued sparplan buys me stocks for cheap. The index fund also covers for the flow to value companies and what not.
I cannot say how deep the market goes or when it recovers, but I am in for the long haul and its time to stick to the plan. What I have already done, is sell off all the experimental bets which were my play money.
#4 Be the Wolf!
The real brave ones with enough money on the side, will start buying soon. Bear in mind that its mostly tech stocks getting battered today, it has not spread to rest of the market yet! Warren Buffet has over 110$ Billion in cash waiting for such a time. If you know what you are doing, this is your play.
Where do we go from here…
Shits getting real. There is no telling if we see a crash or just a correction, and we also do not know much about the recovery. With interest rates rising, and inflation it will be some time before the waters settle.
Till then, I wish you safe sailing!
PS> Share how you are dealing with the current situation and your plan during these uncertain times.