Think back to moments in your investing life where you could have bought those shares. Or that property. Likely at far greater value than you can now.
It’s those moments that define the brave. Those willing to take a risk.
Meet any self-made person who has achieved financial success. They will likely point you to one or two of those key moments.
The business they started after losing their job. The share portfolio they built during the GFC (Global Financial Crisis). The properties they acquired before the housing boom.
You need some bad days to know the good days
In 2018 I unexpectedly returned to New Zealand. After 3 years in Europe, I felt close to the bottom. We’d lost money on a leaky apartment. I had no job to go to. We still had a home — but it was on a long lease and unavailable to us for many months.
By the time we got it back, it was a worn shadow of its former self.
It was a slow, painful process resurrecting a life. Starting over.
It took months for our possessions to arrive on the boat from London. When they did, most were damaged.
We were commuting 2 hours to my children’s school each day through a very rainy Auckland winter.
After years running my own businesses, I was surely unemployable? But with patience and prayer, the right opportunity did come along.
It arrived in the form of an Analyst position for Money Morning NZ. Part of the US Agora network, with 4 million readers worldwide.
An unexpected opportunity
I loved the job. But six months into it, the US parent made the decision to close the business and make my colleagues and I redundant. Our operation was going very well. But events outside our control at the regional office were not. And we got sacrificed as part of the restructuring there.
MMNZ office, Level 26, PwC Tower — now Wealth Morning. Source: Steemit
Redundancy was an opportunity. We had thousands of readers. We were researching and writing on some of the most dynamic financial conditions of our time. We were producing insights as long experienced traders and investors in the markets. Not bystander journalists.
So we bought the business.
That is how WealthMorning.com came about. A business that has gone from strength to strength. And is now one the largest independent financial publishers in this country. With a global investing audience.
Keep working and putting yourself out there to find opportunity
There is always work needing done. Not necessarily the work you’ve done before or in the form or structure you wish it.
Right now, many people are facing job uncertainty like never before. Economists are predicting hundreds of thousands of people could be out of work.
Economists are often wrong. Garbage collectors, it was once shown, could make more accurate predictions.
Job losses in some areas generate opportunities in others. Upheaval and disaster is the mother of opportunity.
It will be the brave who find them. Because taking advantage of new opportunities involves significant risk and change. You have to go outside of your comfort zone. It may not work. You may dig yourself an even deeper hole.
You just have to keep digging until you strike gold.
This share market opportunity
I haven’t seen this level of discount in the markets since the GFC.
Many of the major world indexes are down 30% or more.
Look at some of the lows that local large companies reached in the last few weeks:
- Auckland International Airport [NZX:AIA] — low of $4.26 — not seen since 2014
- Genesis Energy [NZX:GNE] — low of $1.99 — not seen since 2016
- Z Energy [NZX:ZEL] — low of $2.50 — never seen before. Z Energy IPO’d in 2013 at $3.50 per share.
Here’s what the fearful are asking and saying…
‘Why has my KiwiSaver dropped?’
‘I’m in a balanced fund. How can I be down more than 10%?’
‘I’ve sold all my stocks and getting out while I can.’
‘This is going to be worse than the Great Depression.’
‘I’m going to keep all my money in the bank from now on.’
‘Why is my pension down?’
Most of these people are not very wealthy. For good reason. They have no tolerance for risk or the crazed dance of the markets.
Here’s what the brave are doing — blink and you’ll miss it…
They are buying shares in good companies at a significant discount.
This week, markets have changed. It’s been very distinct. The fearful sell-off seems to be pulling back. Those who want out and can’t face the music have got out. Bargain-buying has ramped up.
The Dow made its biggest 3-day surge since 1931. Other markets around the world are following suit.
Why is this happening in such a risky environment?
Keep in mind a few things.
- Many panicked sellers have left the market. As panicked shoppers have the supermarkets. We’re back to more regular, rational shopping.
- Markets are pricing equities based on a horizon of 6 to 12 months. Not the conditions today. Sensible investors are looking to see where things might sit later in the year.
- Assuming we get through the pandemic in a few months by following the lockdown procedure, new cases stop, and a vaccine is on the horizon — the later part of the year could see a very different state.
- We’ll be riding pent-up demand. The biggest fiscal stimulus in modern history. A wall of printed money. Clearing major backlogs of flights, events, deferred shopping — you name it!
- The raging bull market could be back like never before. Not pussyfooting around value but stampeding.
Perhaps we’re glad to see the back of those panicked sellers. Those fools!
But not so fast. They were selling us opportunities. I nibbled. The hairy brave bought up.
Of course, these hopes come with no guarantee. It may be much harder to get on top of this pandemic than anyone estimates. And we may not do so before many jobs and some businesses get wiped out.
Will the brave prevail and profit this time?
Or are the fearful the smart ones in getting out or staying out?
History will tell.
It’s usually on the side of the brave.