Opinion piece: Coping with COVID-19 conditions and investing

Daniel Kibel, Founder and Director of CM Trading gives his thoughts on how we can deal with investment conditions in the COVID-19 pandemic.

“The COVID-19 lockdown situation is virgin territory, and investors have a big decision to make at this stage. If they choose to stay on course with their existing investment strategies, in many cases, it won’t do any harm because so many investment strategies are long-term to begin with.

“If we look back at the downturn in 2008, it took a while, but the markets did recover and they’re now well above where they were, even though they completely crashed just a few years before. There are ways we can come back from this. I believe that, ultimately, we will.

Opportunity in volatility

“Due to COVID-19 lockdown, nobody really knows what the outcome of all of this may be and that is a concern. It is keeping the market on its toes and traders very much on edge. Indeed, the one thing that affects the markets more than anything else is insecurity.

“On the other hand, though, volatility is marvellous; because, for the astute who pay enough attention and capitalise at the right time, there is money to be made. So, without a doubt, now is the time to invest because now is the time to profit. Volatility brings much higher risk, but the returns are potentially enormous.

“For example, you can “short” the market. So, if the Dow Jones is going to continue to go down, you can sell off the Dow Jones as part of a shorter-term strategy. There are other gaps, too – but you have to look hard enough to find them.

“I would definitely say, ‘Stay in it to win it’. Whether you’re going long-term or short-term. Ultimately, cutting your losses and running is simply not the way to make a profit, especially in a volatile market.

“Another opportunity you might want to take advantage of during lockdown is the series of free trading webinars from CM Trading, starting this Thursday, 7 May, with a webinar entitled, Learn the simple patterns traders use to make money. Registration is now open and is also free.

There is no crystal ball

“Markets react to current circumstances. There is no crystal ball that can show us what the future is going to look like. As is always the case, there is opportunity – both in chaos and in stability. But, in either case, we can live by the credo, ‘Invest to make money’.

“Case studies prove that people have made incredible profits in dire circumstances in the past. Historically, investors and asset managers have made significant returns during the rebound following all other financial crises.

“Everything is relevant and nothing is relevant simultaneously. That is the beauty of the market. And that is why there is no time like the present to take advantage, based on your educated perceptions. It’s never a guessing game.

What comes next?

“In 2000 and then again in 2008, many suggested that a new global depression was on the horizon. But we came out okay on the other side. I believe we can get over this. Investors must do what they have always done. That is to follow the movements of the market, understand them and make their money now.

“Understanding is an investor’s greatest tool. Those that are investing now are making decisions that could change their lives for the better. For example, if an investor elects to put in R 20 000, they could just as easily make R 100 000 or lose it all.

“For the long-term, there may not be a huge issue. In the short-term, the best thing to do is to get into the market and take advantage of it now. This is a time to invest and make great returns. It’s always important to remember that your highest loss is only what you put in. Your highest win or gain is completely unlimited.

“Now is the time to take advantage of higher risks with higher returns, go forth and conquer!”

For more information or to get mobilised in your trading journey, visit CM Trading’s official website and open your live trading account today!

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