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#14 - Did we reach the bottom or...?

Updated: Jul 20, 2022

Was this the bottom, or...?

This week we have finally seen the markets return a bit of their lost value, but we are of course still very much in the unknown, and the current investment landscape is still very uncertain.

I will keep repeating myself: Stay calm if you are invested, and see this as an opportunity to buy more, or to get started.

If we go further down, you can buy more or just wait it out.

The LAST thing anyone should do, is to sell everything in panic. It's only in the scenario that you have a few individual stocks, that you don't see will return because their business have been compromised, that you should consider selling.

Okay, so what's positive at the moment?

To be honest, not that much. It seems that the small return upwards we had this week came from better-than-expected numbers from the American consumer economy. That's positive of course, but we're still in a highly uncertain and highly inflationary environment.

I don't see any signs of the current political landscape going towards the better. At best we MIGHT be stabilizing a bit now.

What's negative at the moment?

The war in Ukraine is still ongoing, and it seems that both Putin and Zelensky has no intention of stopping it or giving in.

The big questions at the moment, remains if Europe can rely on gas from Russia, and if the harvest and export of fertilizer will happen over the summer. If not, we might be facing even further raise in inflation and of course a food shortage, mainly in Africa (which is already happening).

So a drag out of the war might have a larger impact on the rest of us, than we imagined in the first place.

Meanwhile in China, the complete lock-down of their major cities is still ongoing and we're now entering the 8th week. The problem here, as I personally see it, is that Xi Jinping has cornered himself.

Xi have been talking about both a zero-covid policy for the last two years, as well as the "common prosperity" of his people. But he can't have both at the moment, since locking down his main production areas, effectively puts a hold on the growth of his economy.

And what's the one thing that the Chinese Dictator can't do? Loose face. He needs to stick to both, and as such he is cornered.

Check mate if you will.

As I see it he has no other option than to keep his trajectory of zero-covid, and hope that it will disappear soon, so his country can return to growing the economy. Signs of it slowing down, have been showing for some time now already.

In other quick news

Snapchat took a heavy hit Tuesday, and went down 43% (!!). This came after a lower revenue from ads, which took with it the likes of Google and Meta, sending a shock through the stock market.

So while we did go up at the end of the week, remember that people out there are still willing to sell everything on small signs of slow down at the moment. It's a very short tempered market still.

That's was it for this week.

Let's jump into the index investing side of things.

Index investing - An introduction

Last week we ended the stock analysis talk, and I will now turn the attention towards stock indexes, which is the other big part of the stock market that you can invest in.

Said briefly, index investing is the "new" trend which will only get bigger as more options surface.

It's a smart way of investing your money as it's:

- Easier

- Diversified

- Takes less time

- Has low maintenance

- And carries with it less risk

So what is a stock index?

It's a way of tracking a bulk of stocks of either an entire market or a smaller sector, industry or area.

You might remember that I keep mentioning the biggest index in the world, the American S&P 500 index.

What it simply does is to track the performance of the largest 500 companies in the US, bulking them all together into a single price and one single index.

This is super smart, as you can then check the S&P 500 index to check how the American economy (because it's the 500 largest companies...) is doing. And because it's so big, it tells you where the entire stock market of the developed world is heading.

By the way, this is why I keep mentioning the S&P 500 index.

It's simply THE index to follow.

Let's carry on.

The magic behind it all

This is the juice.

Instead of investing in all 500 companies individually, you can invest in the entire S&P 500 index through what is called an ETF.

You buy the ETF on any investment platform, just like you buy a stock.

As it is a fund... You can trade... On a stock exchange...

It's simple called an Exchange Traded Fund.


So imagine that with ONE investment, you get:

- Easy access to 500 companies

- You are diversified across the US

- It takes less time to buy 1 than 500

- You don't really need to maintain the investment

- You put your risk on the entire American economy

It's honestly incredible, and for most people who are busy with jobs, kids, dogs, cats, frogs, whatever, and do not want to spend time reading the financial report of Snapchat, it's simply the right solution.

So when you hear about an index, think "bulk of stocks that you can invest in". Since the ETF market is so big, you can invest practically in any index ever created.

There's 8552 ETFs circling. So the options are endless.

Do you want to invest in the entire world?

There's an ETF for that.

Do you want to invest in gold?

There's an ETF for that.

The genomic revolution?

The ETF world got you.

In other words, you can with just a few ETFs be invested in literally thousands of companies, spread across both the world and many different sectors.

You see why it's good?

I hope so :)

My portfolio consist now of ~60% ETFs.

And that was it for today.

Next week I will continue the ETF talk.

Do you want to learn more?

Then book a free 15 min call with me to learn how I can help you, and ask all the stock market questions you have:

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