facebookUS stocks rally following the Fed corporate bond announcement. Is it a good time to invest now? - Seedly

Anonymous

17 Jun 2020

General Investing

US stocks rally following the Fed corporate bond announcement. Is it a good time to invest now?

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Lin Yun Heng

17 Jun 2020

Senior Analyst at Delphi

You are being influenced by short term noise. If you have been following the market, you should know that US market are at all time highs especially NASDAQ. Potential upside is getting lesser each day so if you are like me who is 90% invested, I'll just hold out and just collect my dividends. If you have not even put a single penny in yet, the best time to start is wherever possible and would suggest doing a DCA into roboadvisor such as Syfe.

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The problem with asking if it's a good time is that there's no right or wrong answer to this.

Let's say stocks rally and someone's opinion is that the market is overvalued, the full effects of covid-19 hasn't been felt, that once bigger more diversified companies find it hard to balance the books, they file for bankruptcy. They owe a lot of companies money. We have a credit crisis. The market collapses over many months as the dominoes fall.

On the flip side, another person's opinion is that interest rates are low, and the Fed intends to keep it that way. With cheap money, lending and borrowing becomes easy. Any problem can be financed today and worried about later. Interest rates are low - where should people put their money? The hunt for yield begins, they dump it into the stock market. Prices go up. Companies can borrow money for cheap and invest and so on.

You can see how there's no right or wrong. What you need is a system so that you won't regret your decisions. For example when the market fell sharply in Feb to March, some people timed the markets. "Wait and you will see prices will go much lower". But then prices rallied to less than 10% from pre-covid highs. So what do these people do now? Buy in? They will ask "aiya, I should've bought earlier!". Now they wait. If it goes up, how?

If instead there was a system to buy bit by bit when it goes down, you'd be able to enjoy some of the rally. If it does indeed go down, then you've averaged it out and managed to buy in for less.

So is it a good time to invest now? Only if you have a system or investment strategy in place so that you won't regret your actions today.

Tan Kel Vin

17 Jun 2020

Financial YouTuber at Kelvin Learns Investing

Look longer term, like 10 years, 20 years later when everything has gone up by a lot. I also discuss...

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