October 29, 1929 will be forever marred with the moniker of “Black Tuesday” as it was the final nail in the coffin that housed a once booming Gatsbyesque economy. As the markets opened on that faithful day, it is said that the announcing sirens could not be heard over the shouts of, “Sell.” By the end of the day, close to $16 billion of assets had been lost forever while the rest of the country sunk deeper and deeper, with unemployment skyrocketing and Gross Domestic Product (GDP) grinding to a stop. The take away from this tragedy: never sell!
Traders were clearly misinformed back then. Even though the value of their stocks and accompanying assets were tumbling, they shouldn’t have pulled out. Many were afraid of losing their wealth and so asked for cash returns on their stocks and bonds. This came from a misinterpretation of market trends and the belief that profit charts wouldn’t bounce back, which they always due in the end. In simple terms, your $500 investment in Infosys might dip to less than half its worth next year, but then bounce back to triple the amount the following year; no one short of the Oracle of Delphi could predict the future value of an asset; however, even a novice trader can know that eventually, anything is possible.
The problem is, even though we think of ourselves as so much more financially enlightened than our predecessors, you’ll still find many trading all their non-liquid assets away, which only makes the recessions of today last longer than they should. The clever investor will instead take advantage of how cheap stocks are getting in times of economic downturns, so long as they have the capital, of course. When the government provides those companies bailouts and low interests loans, they’ll build themselves back to their initial starting point at one point, which will, in turn, grow your wealth too.
For currency traders, gold and silver have historically done remarkably well, giving credence to the financial advice of libertarians like Ron Paul. Precious metals can be bought bullions, solid bars online, or you can simply buy stock in mining companies and get the same bang for your buck. Follow this simple advice, and you’ll have no choice but to succeed.