There are certain risks in investment, so you need to master some skills. Here are the skills we summarized.
One leaf blinds the eyes
I still believe that we are in a long-term bull market. The good news is that the long-term bull market will last for a long time. In the last century, we experienced two long-term bull markets (1950-1966 and 1982-2000), each lasting an average of 17 years. The current long-term bull market started in May 2013, and it has only been 8 years since today. If history can be used for reference, we have only gone through half of this bull market.
The two main drivers of the current bull market are technological and medical advances. The COVID-19 epidemic has greatly accelerated the progress in these two aspects. Due to the blockade, we are moving from offline economy to online economy at a faster speed. Medical progress is even more obvious. It usually takes 10 to 30 years to develop a new vaccine. In order to fight against COVID-19, it only took 11 months to develop a vaccine. We attribute this discovery to the innovative methods used to conduct the research. If it can be successfully applied to other fields (such as cancer or Alzheimer's disease), the quality of life of millions of patients will be significantly improved. Ironically, the current long-term bull market may be prolonged by the COVID-19 epidemic.
An important tip for wise investors: We are in the middle of a bull market, and the stock market is expected to continue to improve in the next 5 to 10 years.
Capture market entry opportunities
It will not pay off to invest only by entering the market. If it were easy, we would all become millionaires and no longer have to work. The emergence of a market correction period becomes apparent only after the fact. But no one knows in advance when they will occur and what will trigger them.
Most investors lack discipline and will not buy during the market correction period. Why? Because they were frightened by the negative reports that predicted the market would fall. Keep in mind that journalists charge a fee to scare you. So that you will wait for the dust to settle. But the market has already begun to rebound when everything is over:
Important tips for wise investors: If you don't know the crystal ball of the future, don't think about how to capture the opportunity to enter the market.
Cash replacement bonds held
Many investors hold cash because of the maturity of bonds, and the current yield is low, so they did not reinvest. If you want to wait six months, one year or two for the interest rate to increase before investing, you'd better think twice: this is a dream, not a reality. You need to accept the fact that if you do not take risks, the bonds will not yield any income. Therefore, investors pursuing income can refer to the following alternative investment categories: defensive (relative to stocks) reverse convertible bonds - the underlying assets are relatively safe. Its index performance is better than that of individual stocks. Alternative investment - it should be considered as a substitute for some fixed income exposure. I mean hedge funds or private market investments. China is the only market where bonds look more attractive than stocks. I am analyzing RMB government bonds and high-quality corporate bonds, because the yield of RMB is higher than the currency of "developed countries". Obviously, there are currency risks, but it is absolutely a good signal that the RMB can remain stable despite the current challenges facing China.
An important tip for wise investors: Holding cash and planning to reinvest in the bond market at a slightly higher interest rate in the short term is not an effective strategy. It is time to be creative and use alternative investments to replace certain bonds. From the perspective of opportunism and selectivity, defensive reverse convertible bonds may also help.
Conclusion
I wish you every success in your investment and the early realization of wealth freedom.
