A Global crisis is the best time to enter the market.

A Global crisis is the best time to enter the market.

The world has suddenly become a different place in the last 2 months, with the coronavirus taking a host of nations by storm. And times like this are very hard but you can enter the market and make a fortune out of it.

We all know the financial crisis of 2008, the dot-com bubble in the 90s and the great depression of 1930. All have one thing in common that is the stock markets crashed, the stock price of many good companies reached their lowest point. Do you think those organizations broke down?

Take an example of Coca-Cola, if someone had bought 1 share which was less than $7 during the great depression today the costs of it would be $277.01 despite all the crisis occurred during all those years. 

Now take a look at an Indian company, TCS. If you had invested Rs 1000 during the crisis of 2008 than today it's value would be Rs 15,136.                                                                                   

 Stock chart of TCS

                                           
Let us see some more numbers

See how markets recovered after every crisis. If you had invested Rs 100,000 at the lows of swine flu panic in April 2009 then it would be around Rs 210,000 by November 2010.

Similarly, if you entered the market around the lows in January 2016 at the time of Zika virus, it would turn your investment into Rs 150,000 by October 2018.

In the long run, when things are under control, markets will recover and the business will be fairly priced again. Hence, a pandemic will create opportunities for investors to create wealth over the next 8-10 years only in quality companies.

Now we are thinking if every crisis creates opportunities for investors then everyone should invest and if everyone starts investing in situations like this the stock price should never fall. But there's a catch when something happens like this the sales of the company goes down which lead to bad earnings and some investors are in fact panic selling out of fear, Others are more rationally selling because they don't want to own a bad business that will have a bad year. And this creates opportunities to get into the market.

So, during such, stressful time it's recommended to buy only good businesses for long-term wealth creations. Some investors make the mistake of buying very cheap stocks thinking that it would grow without knowing the business and lose a lot.

Those who keep clam, patient and accumulate a basket of well-diversified stocks will emerge as successful investors.

~by Suddha.