Thousands of people searching “should you buy stocks now?” on Google every month. It is a loaded question in recent times. The S&P 500 began a historic decline in late February 2020.
Historically, this time for the market it has taken an average of around 2 years to recover from a crash. But in just 149 days, it bounced back. The index was hitting record highs once again by the end of August 2020.
In 2021, still, the stock market is behaving in an unexpected manner. For example, there are several events, like the United States economy output is still unclear, and the GameStop-Reddit-hedge fund saga.
Due to the erratic behavior of the stock market, along with the economic uncertainty across the world, investors are worrying a lot. But it does not mean that you will stay out of the market. You need to figure out a way of “should I buy stocks now?”
Understand The Main Street-Wall Street Imbalance
In 2020 the recovery of the market was clearly at the cross purpose of the economy of the U.S.A. and till now the same imbalance exists. But if you get a closer look, we will be able to understand that this dispersity might not be as puzzling as it seems.
The stock market always reflects the sentiment of the investor about the future, and not whatever is happening right now. The daily headlines state that most retail investors are more inclined to sell and buy.
At the same time, institutional investors are more into looking far ahead. And the recent market highs do not show that Wall Street is not frightened. The S&P 500 is also market cap-weighted. It means all those bigger companies will have a much bigger impact on its performance.
There are a lot of the largest companies that are in the index from the tech industry. The tech industry is the specific industry that has not been hit as hard by the global coronavirus pandemic.
And those same companies have assisted in pushing the S&P 500 to its record highs. And all these despite all the economic issues, which are the result of COVID-19.
Time In The Market VS. Timing The Market
When you are looking for the answer to one of the most popular questions, “should you buy stocks now?” and also “the stocks you should buy now.” You first need to understand the difference between timing the market and time in the market.
As per the financial experts, when you are starting an investment is not as important as how long you stay invested. And that is all that you need to remember the most, even during a pandemic like this.
The best way of building wealth is staying invested. But it is also true that it can sometimes be challenging. If you invest only for long-term goals, it becomes easier. So, it is always said not to invest the money that you may need in the next 5 years.
It is because it is totally possible for the mutual fund or stock that you have purchased to drop in value in the short term. In case you need those same funds for some emergency purpose, you have to sell the investment before it manages to bounce back; it will be a huge loss.
But when you are invested on a long-term basis, all those short-term drops or fluctuations will not be of much concern. It is nothing but compounding gains, which will help your long-term or retirement financial goals.
Should You Buy Stocks Now?
When you are thinking about “should you buy stocks now?” there is another thing that you need to know. And that is, everything depends on what you are planning to purchase or where you are planning to invest.
Though the future of some companies seems really positive, it is not applicable for all. While stocks of some companies seem really appealing to the investors and also performed quite well even during the pandemic, there are also companies with totally opposite scenarios.
So, just like every time, do not skip the research part when you are making a decision on buying stocks or investing your hard-earned money.
Should You Buy Stocks In 2021?
Here is some hopeful news for you in 2021, when you are thinking about “should you buy stocks now?” Let’s have a look at them.
- Successful vaccination roll-out is providing a load to an increase in trade, movement, and spending.
- Some closed industries are going to reopen, like entertainment and travel.
- Just the same way, some takeovers will again start to continue.
- During this global pandemic, some industries like biotech, e-commerce, tech have thrived and will also continue to grow.
- The lower interest rates will motivate people to invest or spend.
Along with all these pieces of hopeful news, there are also some reasons that will make you feel cautious about 2021.
- Fears over all the new strains of coronavirus.
- Short-term increment of unemployment along with ending of all the government support schemes.
- Since the start of the COVID-19, the stock market has seen a lot already. That might be indicating that they are due to fall.
- Brexit and obviously the impact which leaving the EU will have.
- The central bank of the United States of America is all set to unwind its all emergency purchases of the United States corporate bonds. It implies the further move away from support of the very bond market along with the other pandemic support measures.
Some Best Stock To Invest In
For you, here are the names of the best stocks that have the potential to perform really well now, and they have also proven it.
- Virgin Galactic.
- Seraphim Space investment trust.
So, I hope after reading this article, you get the answer to some of the doubts about investing in the stock market now. It all depends on the stocks that you are choosing and whether you are planning for a long-term or short-term investment. But in case you want to consider “should you buy oil stocks now?” I will ask you to do a little more research.