Financial markets are experiencing turbulent times for the second year in a row.
But for several months in a row we have seen a double-digit increase in stock prices.
Moreover, both on the domestic stock market and on foreign ones.
Has things gotten better?
I wouldn’t be so optimistic.
In addition, the method of “fortune telling by coffee grounds” is contraindicated for investors.
He often makes incorrect predictions.
As well as the methods of technical analysis.
1) How to reduce the risk of losses
This is precisely the question that worries newcomers who have only recently entered the promising world of big money and investment.
Here you need to understand the following circumstance.
When the stock market is actively going up, we quickly forget that before that, “bears” reigned on the stock exchange for a long time.
Which drove the market to the very bottom.
And vice versa, in a falling market, in panic shock we forget about the basic fact that every drawdown in quotes ends with their inevitable growth.
2) The cyclical nature of the economy and stock market volatility
This is all we need to know about the behavior of financial markets.
We (and no one in the world, including AI) are able to reliably predict what will happen to stock prices in the near future.
At the same time, we can be unequivocally sure that the downward cycle in the economy follows the upward one, and a growing “bullish” market always replaces a falling “bearish” one.
This is perhaps the best explanation of what is happening now in the economy – and, as an echo of this, in the stock market.
Just the awareness of this fact makes us much calmer and more confident in receiving a decent profit.
3) Consistency instead of greed
This is what I advise all my friends who are interested in investing in the stock market to do.
(1) Remove greed and the desire to “make money” here and now.
Because such motivation pushes us to take excessive risks, which always ends very badly for our money.
(2) Add vision and consistency.
What does it mean:
Invest long term + Buy assets denominated in different currencies + Adhere to a “portfolio approach” to reduce risks.