Most stock markets fall, so private investors hardly invest. Whether in Australia, Hong Kong, Europe or the US, the leading indices are hanging their heads everywhere right now.
Can they fall further? Yes, but it also depends a lot on the individual case and the assessment. For example, the Hang Seng index is already trading at a price-to-earnings ratio of 11.53, while the S&P 500 index is still trading at 19.3 (13/07/2022).
Should there actually be a natural gas bottleneck in Europe, the indices could fall even more here. Still, there are good reasons why it is now the best time to start investing.
1. “Better to invest fairly rightly than exactly wrongly”
Stock market declines are evolving at different speeds. Thus, it is not possible to accurately predict the bottom. But one thing is for sure, if you miss the first strong increase, your return will be significantly reduced.
So it is better to start investing slowly during the crash. Of course, when stock prices can fall and rise, crises are always the best time to get in.
Only one point is crucial: equities are not short-term investments. If, on the other hand, you think for five, ten or fifteen years, there are good opportunities now. So does the successful investor Peter Lynch.
2. This crisis will also come to an end
In the current situation, it seems difficult to imagine that stock markets will rise again. But they will with a probability of almost 100%.
For example, politicians do not like recessions when unemployment rises. As soon as growth becomes negative and unemployment rises, they launch new economic development programs.
We are currently in the phase between high inflation and recession. Strictly speaking, however, inflation is already falling because many commodity prices are falling in the short term.
China is already lowering interest rates and seeing isolated unrest. If the situation worsens because other major economies are also suffering, the country could lobby Russia to end the war. In addition, Russia could quickly run out of money if commodity prices fall. Another reason to start investing now.
Declining valuations attract large investors
Large investors, who invest billions of euros, are aware of the valuation of the individual markets and asset classes in relation to each other. Many business owners also prefer to buy when prices are falling. Your purchasing decisions are therefore of great importance.
The longer the prices fall, the cheaper the valuations become, and the more money flows into the market, which eventually turns around. In addition to the Hang Seng index mentioned above, the DAX, for example, is also no longer expensive with a price-earnings ratio of only 11.4 (07/13/2022).
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