Today or rather last night, U.S. Stocks Slide to Worst Inauguration Day Drop in Dow Industrial History.
What an ironic situation when Barack Obama is supposed to represent hope and change. So how will this incident impact us?
There is a saying in the market “When the U.S. sneezes, the World catches a cold.” Therefore, if past history serves us right, the market will drop for a short term. And if you like Warren Buffett treats Investment like a Business, this will serve a great buying opportunity. Why? Because when will you purchase more stocks (as in supply) for your business? You are right! When the prices are low! Aren’t the prices low now?
Well, most people invest a huge sum of money (sometimes all their savings) when they see an opportunity. This is no longer an investment but gambling. As we don’t inherit a prophetic thinking to predict the market as accurate. We wouldn’t really know where the market bottom will be. Hence, we should go in on a systematic approach through a Regular Saving Program (RSP) strategy which is a fixed amount across 12 to 24 months period. By doing so, we are taking advantage of the low prices at the same time, reduced the risk of investment.
Lastly, do you know that, looking back at U.S. history… In 1933, there was a 12 percent slide after Franklin D. Roosevelt’s election, gave way to a 75% rally! Past performance is no guarantee of future results but it’s the best indication. What would you do?