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In the second half of 2019, the stock market soared; S&P500 The index continued to set new highs until mid-February 2020. Then, the coronavirus pandemic swept the world and stock prices plummeted.
By March 20, 2020, markets in the US and UK had collapsed by 35% due to growing concerns about the global pandemic. Fortunately, the world recovered, and stocks soared after an effective vaccine was announced in November 2020.
5 years with ups and downs
This may be my last stupid post, so I’d like to share what has fueled my stock market success over the past five years.
1. Sometimes prudence pays off.
At the end of 2019, my wife asked me what to do with our family portfolio. She replied that I should sell everything and get 100% cash.
Experts argue that this “market timing” is a bad idea. However, his wife moved her 50% of her assets into cash, avoiding the worst of the spring 2020 financial crisis.
2. Market crashes bring great opportunities
March 20, 2020 I was so excited about the 2020 market lows. The stock market crashed and I felt like a kid in a candy store surrounded by bargains.
Within days, 100% of our wealth was invested in stocks, and stock prices have increased significantly since then. This is another example of how market timing worked.
3. Madness can be contagious
During the “meme stock frenzy” of early 2021, retail investors rushed to buy up shares in distressed companies, and the situation quickly turned violent.
Various tattered stocks soared, and corporate valuations skyrocketed to levels far removed from economic reality. When these meme stocks inevitably crashed back down, some wild investors lost everything. Fortunately, I avoided this stupidity.
4. Bargain hunting still works.
At the end of 2021, U.S. stocks soared to all-time highs, led by mega-cap tech stocks. At the time, I repeatedly argued that these were overvalued and poised to crash.
Within 10 months, the S&P 500 crashed more than 25%, regaining nearly two years of gains. At this point, my wife and I jumped in and bought 6 supercap US stocks at a bargain price on November 3, 2022.
So far, the “worst” of these cheap U.S. stocks are up more than 50%, with some nearly doubling. This shows you can use value investing techniques to identify and buy growth stocks.
5. There are plenty of bargains in the UK.
of FTSE100 Up 9.1% in 2024, there are still plenty of Footsie bargains to be had. for example, Legal/General Group (LSE: LGEN) stock offers the highest dividend yield on the London stock market.
Founded in 1836, L&G is one of Europe’s leading asset managers, managing £1.3 trillion of assets for 10 million clients. On Friday (May 10), L&G shares closed at 248.6p, valuing the insurance and investment company at £14.9bn. In one year, the stock price increased by 10%, but in five years its value decreased by 8.3%.
Over the past year, the share price has fluctuated from a low of 203.1p on 25 October 2023 to a high of 259.6p on 31 January 2023. They seem to be pretty “in range”, but I have high hopes for a breakout that will take them higher.
On the other hand, my wife and I own this stock for passive income and it is currently performing at 8.2% per annum. Of course, this dividend could decline if the stock market crashes again, as it did in 2020. But we are playing the long game.
