What can I do before the Stock Market Starts to Fall

There are only two types of investors considering the topic of this article.

An investor with a reactive approach asks what to do when a market crash occurs. A proactive investor wants to know what he can do before the markets crash.

The pandemic has caused the worst economic crisis in living memory. The current downturn in the US is a lot worse than the years following the financial crisis. Unemployment has reached in September a new high of 13 million people. In 26 states, the situation is urgent, where one in five households cannot afford to pay rent. It will probably get worse as unemployment benefits for another 12 million people have been withdrawn by 26 December and citizens are waiting for a second stimulus package.

The Federal Reserve (FED) printed money out like crazy to cover up all the incentives necessary for running the county. Despite all this, the stock market is experiencing an economic expansion that hardly anyone would have thought of a few months ago. 

Global stock markets have hit record highs. Tesla stock (TSLA) is pushing to new record highs, bringing the valuation close to half a trillion dollars despite the pandemic. On top of that, the price of digital cryptocurrency, Bitcoin, has hit a new all-time high breaking through $35,000. The currency started trading ten years ago at $0,3?

Not only the US but the global economy is in bad shape. Businesses are failing and millions of people around the world are losing their jobs. Nevertheless, markets are thriving. We do not have to be a world economist to put together that something is wrong here.

„How to prepare for the worst-case scenario if markets collapse?“

Keep building your assets if possible

First of all, strengthen your cash emergency fund. It is always good to have the necessary cash on hand for basic needs, especially during the crisis

Have your investments audited to see if you have accidentally invested in overvalued assets that are most likely to fail.

Avoid investments that are riding a wave of hype. An example is a newcomer to the market, Nikola as a direct competitor of Tesla. After a direct rocket rise in shares in less than two months, investors learned their lesson followed by a hard fall.

Diversify your assets

The best possible defence against risks in any investment strategy is diverse and well-balanced financial planning.

We are living in the time that everyone strings for making money. We tend to be trapped in quick and easy returns, which rarely ends up successfully.

Investing is a long run, and you can only get rich day by day if you win the lottery or inherit the property.

Current markets are volatile. You can keep up only if you divide your portfolio wisely.

For example, gold as a store of value will hold you back in times of crisis, but it will not help much in times of economic prosperity.

Investing in stocks of companies and index funds are appropriate for generating returns in times of economic expansion, but in times of downturns you can learn a hard lesson in the form of big losses.

Actively managed alternative investments take the best of both. Therefore, more and more investors have been looking for actively managed opportunities for asset valuation.

This form of asset management is not dependent on economic development and, like growth, can take advantage of declining markets to its advantage. In risky situations, the investor stays aside and waits until "the storm is over."

At Salus Populi, we are not in favour to build long term assets where profits could get wiped out in a matter of weeks or even days at the time of the collapse. Therefore, we also apply the methods of active management. Salus Populi provides to its members' opportunities for an asset appreciation, regardless of the economic health. And when necessary also the protection of own their capital.

Leave your cash in the position

If you were hit by the market crash, do not panic. In times of decline, it would be a big mistake to sell your investments. You can lose your income and, yet worse, your invested capital. If you do not need the money, leave it where it is and wait for the markets to recover. The question is, how long it will it take?

Do not wait until it is too late

The world economy is in trouble, and markets are still growing. If this bubble bursts, it can have substantial consequences on your finances. Our members have opted for stability and protection of assets even in times of market downturns. To find out more about Salus Populi, cooperative, contact us on our website.