The Stock Market and Investing during an Economic Recession

You know, I tell people that not everyone can be a self-employed entrepreneur or business man, some people have to work in companies, and others have to earn using their skills talent and ability while others will have to freelance. The different between any of the groups listed above is the ability to handle money. The ability to understand money, double money and make money work for you is what differentiates the rich from the poor and one way to invest money is in the stock market.

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What is the Stock Market?

Virtually every country has a stock market and the stock market is a network of financial exchanges where companies that need funds come to sell part of their company ownership to the public. The market is place where securities are traded on a daily basis. With the stock market, a lot of people invest in companies for a long run while other make the market move by gaining on a daily movement of the market known as trading.

Investing During this Pandemic

The pandemic caused a lot of crashes and made a lot of investment lost their money, unlike a regular market correction where the stock price drops a few percentage, a crash is a big blow to the investor which makes the market go down as much as 20 -99 percent this is when there is a bear market.

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After the 2008 crash, the market has enjoyed an eleven year bull run making virtually all investment profitable but with the pandemic came a very big crash. Do not forget it is believed that when the market is good, then the economy is good but when the market is down, the economy is as well. To explain this further, every bull market comes with a bear market and every bear market comes after a high bull market or bubble. Don’t get it twisted, when a bubble will burst can’t be determined by a person or a giving time, nobody knows when. Prediction doesn’t determine the burst of a bubble or the beginning or a recession. The market is not predictable for a burst or a bubble. A lot of people predict the daily activities of the market and as this has been proven good for a lot of people, it is seen like playing a lottery on the stock exchange market and this is what most trader do.

The market is not a place for emotions, a market crash should be a time to cry or get worried. For every crash, there will be a rise but a lot of people do not want to lose their money so the pull out their funds in panic (well, if there were no pull outs, the market would have not crashed in the first place). The worst financial advice is to pull out funds when the market is red. There will always a recovery in the market after a crash. Investors believe that a market crash is an avenue to get shares at a discounted price, so it is black Friday for them. So holding an investment during a recession is what investors do and advice people to do.

Another advice during a recession is be patient. The stocks will not recover immediately but will recover at the long run. It is also good to diversify investments so that the hit from one will not cause a complete loss in finance, as you can lose part or all of your investment on the stock market.