What are your Investment Rules?

[kiora]

Probabilities/Possibilities

"The Nasdaq Just Entered Correction Territory. History Says This Will Happen Next"

https://finance.yahoo.com/news/nasda...091200861.html

The odds?

"the Nasdaq has declined at least 10% from a bull market high 11 times in the last 15 years. Three of those events developed into bear markets, while the other eight never progressed beyond the correction stage."

"after reaching the market correction threshold, the Nasdaq has typically rebounded quickly. Indeed, during the last 15 years, the Nasdaq has returned an average of 21.9% and a median of 24.8% during the 12-month period following its first close in correction territory."

"The best chance to deploy capital is when things are going down."

[kiora]

The Blue Squigly Line

"This indicator predicted every US recession for 35 years and it’s flashing a major warning for stocks!"

https://www.livewiremarkets.com/wire...TIAL%20READING

"When the blue squiggly line spikes towards historical highs, it has every time in the last 35 years foreshadowed a bear market in US stocks."

"When the blue squiggly line spikes from historical lows, it generally corresponds with major lows in the S&P 500, and or very strong periods of stock market performance."

[kiora]

"Risk is your friend - you should manage it, not avoid it:

Part 1/2
Why many investors confuse fear and risk, and what to do about it."

https://www.livewiremarkets.com/wire...rm=READ%20MORE

"The definition of risk within the context of investing is that you get results that are different from results that you would reasonably expect. It is often measured by your standard bell curve matched to a mathematical concept called standard deviation. The more standard deviations you are away from the expected result, somewhere around the high point of the bell curve, the higher the “risk”.

" if interest rates shoot up and the value of your bond falls from $100 to $85, you made $4 of income that year but you lost 15% in value"
"whilst the bond might not be risky, the risk in this specific event was high"

"But that’s one kind of risk, there are many others and frankly, they’re often ignored. Risk such as:

Liquidity risk
Inflation risk
Market risk
Credit risk
Currency risk
Counterparty risk
Regulatory risk
Management risk
That list aside, losing money is the doozy of all "risks" so let’s look at that quickly.

"If someone decides to not invest in the stock market because it’s too “risky”, they may choose a term deposit instead. Let’s say the term deposit pays 5% per year."

"One of the world’s largest ETFs that tracks the MSCI World stock market index is up 20.26% in the last 12 months (through 30 Jun 2024). It’s all AI froth, I hear. Maybe, but it's also up 11.98% per year over the last 5 years, and 9.38% over the last 10 years. Both time periods are pre-AI. Choosing the "less risky” option has suddenly become quite risky in that you’ve massively compromised your investment goals. If you’re 35, 45 or even 55, you almost certainly can’t meet your retirement goals with a 5% return. Never mind that you’ve ignored one of the all-time omni-present risks, especially now – inflation risk.

"The asset class with the best track record of beating inflation, hands-down and over a long time, is global stocks. "
" an investor chooses what feels like the lower risk option only to have it turn out to be quite high risk. Just not the original risk they were thinking of.
And that’s what I mean, that’s where investors often confuse fear and risk. This is important because when it comes to investing, there are no risk-free options."

"People talk about the “risk-free rate”, and that’s often proxied by the 10-year US Treasury bond rate. But let’s be clear – that bond is not “risk-free”. It fell over 3% in 2021 and it fell another 15% in 2022. Back-to-back loss years for high quality bonds are rare, so it turns out that the 10-year US Treasury bond has been very risky of late"

"That’s the world’s supposedly safest asset, down 3 of the last 4 years, and down almost 2% per year over the last 5 years."

I’ll post Part 2 later this week and cover this idea of “low risk” options. Hint.....real estate is not low risk."

Good luck out there."