Lets discuss the Federal Reserve, buying individual stocks, investing in the current market, several items to keep in mind when investing, and everything else you need to know – Enjoy! Add me on Instagram: GPStephan
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Ok, so first things first: This week, the FED started buying Corporate Bonds. If this gets even worse, it’s SUSPECTED that the FED might even go as far to buy INDIVIDUAL STOCKS of companies…he believes the SP500 could re-test its previous lows in this next month, and at that point…the FED would have no other choice but to buy stocks and take ownership of American Companies.
https://www.cnn.com/2020/06/16/investing/scott-minerd-stock-market-federal-reserve/index.html
Unfortunately, though…it’s not exactly clear if investors are heeding that type of advice, because now – we have this: ‘Cooped-up’ millennial traders have sparked a new pandemic — it won’t end well, warns Princeton economist.
https://www.marketwatch.com/story/cooped-up-millennial-traders-have-sparked-a-new-pandemic-it-wont-end-well-warns-princeton-economist-2020-06-17
He says, that basically, cooped up millennials are bored at home – and because stock trading apps like Robinhood have made investing so easily accessible with as little as a dollar – people have flooded the stock market in search of easy profits from home, by investing in hard hit companies.
This is also mirrored by a well known investing Billionaire, who said mom and pop investors in the stock market will “End in tears” – and more specifically, he’s warning against people who are speculating in stocks for quick profits. Although, I DO think these very wealthy investors have a point when they warn against stock market speculation.
But, even with all of that out of the way, there’s also another concern: The value of the dollar could fall, very very sharply.
https://www.marketwatch.com/story/the-dollar-is-going-to-fall-very-very-sharply-warns-prominent-yale-economist-2020-06-16
And for us as individuals…it’s a little troubling. It could mean that stock and real estate values end up going way up, so for those that are not invested in the market – it’s going to be a lot more expensive to get in. But, again, this is really all speculation….and it’s yet to be seen if something like this is going to happen anytime soon.
However…not even that is dissuading people from holding onto cash at record levels right now. According to The WallStreetJourney, cash in money market funds reached $4.6 trillion dollars, the highest level since 1992.
Obviously, the reasoning for this is simple: many wealthy investors don’t know how to navigate investing in such a volatile market where the Federal Reserve can essentially make announcements that move the markets, so they’re holding out in cash while things simmer down…and, I’ll be honest, I’m in the same boat.
On a positive note, though…it does show that there’s a LOT of money sitting on the sidelines, and if prices do fall too far…there’s no shortage of people with money to buy back in. So, that COULD be a good sign, in a weird way.
And finally…in some odd, kinda good news on top of all of this…the HOUSING MARKET IS ACTUALLY GOING UP.
Zillow has also found more buyers participating in the market, with 50% of offers facing a bidding war to get the property. The reason for this is that there’s less inventory on the market as sellers hold off from listing their home, interest rates are absurdly low, and that’s fueling a housing shortage that’s causing buyers to pay more to get the same home – driving up prices.
All in all, though…at the end of the day, what this tells us is that we should NOT ONLY have cash on hand to see us through potentially rough times, but also that the safest option is to continue to stay invested in the markets.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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