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Sell when everyone is buying; buy when everyone is selling

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The world has reached a bit of a weird place. For years, the only way was up. Suddenly, it all seems like it is down. In fact, it seems to have gone off the rails and, in the classic phraseology stop the world, I want to get off.

When times are good, markets are going up, investments pay off and demand exceeds supply. All is good. We’ve just moved into that other world where times are getting worse, markets are going down, investments have gone through the floor and supply exceeds demand. All seems bad.

It reminds me of the old investment advice: buy when everyone is selling and sell when everyone is buying; or, as Warren Buffett puts it:

That’s what we’ve seen with Celsius, but we’ve also seen it across all markets. After all, tech stocks in general are down in 2022. Just the other day:

  • Apple lost $154.11 billion in market cap and fell 5.87%, its steepest drop since Sept. 2020
  • Microsoft lost $109.33 billion and fell 5.5%, its steepest drop since Sept. 2020
  • Alphabet (which owns Google) lost $85.32 billion and fell 5.9%, its steepest drop since Mar. 2020
  • Amazon lost $98.11 billion and fell 7.06%, its steepest drop since May 2022
  • Meta (formerly Facebook) lost $42.55 billion and fell 9.37%, its steepest drop since February 2022

Meanwhile, in 2022, the markets have been horrible for those invested in tech (of which I am one). From money.com in May:

Technology giants like Netflix and Meta are down around 67% and 42% for the year, respectively, while popular "at-home" tech companies like Zoom and Peloton are down around 40% and 59%. Even shares of Apple and Google's parent company Alphabet have fallen more than 20% so far in 2022.

Similarly, investments in cryptocurrencies are down 70% or more, and the general markets are looking gloomy.

Why?

I guess it’s because we all became super-hyped about tech stocks in 2020 when the pandemic hit. As many called it a K-shaped economy, where digital is the upper part and physical is the lower part of the K, and everyone expected software to eat the world.

It has kind of done that but … the markets are concerned. What concerns? Well, in general, it’s the economy, stupid!

The economies worldwide are tanking. The dollar has risen, but nothing else has, and now ever the surge of strength of the dollar is falling.

We are moving into a recessionary world.

According to the global recession probability model by Ned Davis Research we are 98% likely to experience a global recession over the next year.

Well, that’s cheerful isn’t it?

But what’s causing this? War in Ukraine creating rising energy costs and general uncertainty? An over-hyped tech market that is rebalancing? A lack of belief in governments and their policies?

It’s all of these factors.

However, going back to Warren Buffett’s comments, now is the time to buy. Buy what, you ask? Well, I’m fully invested in tech stocks and just wish I’d sold them all last year to buy them again this year. As Warren Buffett said:

 

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Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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