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In a recent report by CNBC, it was made clear by Julian Emanuel (BTIG) that investors should be ready for a downdraft. It could go down by as much as 20%, with small caps being at the centre of the crisis. it is time to revaluate and prepare for the concurrent volatility of Wall Street and Lombard Street to take a further downturn. The situation as it stands now has put 2020 almost out of the mind of major investors, as they look forward to 2021 for the stock market’s revival.
Preparations for 2021 Still Needs to be Made in 2020
If you are familiar with the most important tips to progress your trading even in times of global crisis, you should also be aware of the fact that in order for 2021 to be profitable, cultivating the situation in 2020 with tact right now is essential. For example, every time the market takes a downturn, it divides the investors into two groups.
- Major and minor investors who have lost heavily
- A select few investors who have gained impressively from the situation
As most of us fall in the first group right now, it would be the next steps we take in 2020 now, which will determine how well we fair in 2021.
Treating the Down Market as an Opportunity is Not Easy
Treating any bear situation as an opportunity is the standard rule for all investors who know anything about the stock market. Unfortunately, in spite of that being common knowledge, a good number of pf investors are drowning during the 2020 stock exchange crisis. To explain the situation and the contradictions here, let’s look at a few facts next.
- In order to buy successfully during a crisis, you need to have that innate ability and acquired experience to make intelligent predictions
- A large number of smaller investors do not have either to work with
- if a party ends up buying the wrong shares, 2021 will not be a better year for them
- Those that have already invested heavily into drowning or drowned companies earlier, cannot take advantage of the situation anymore
- In order to take advantage of a down market, an investor needs available funds, which is often a problem in crisis situations
Predictions: It’s All About the Bounce Backs
Buying shares in 2020 and expecting to turn a profit from them in 2021 is something that hinges on one important aspect – the bounce backs.
Bounce back is a term used to signify the bouncing back of previously dipping segments and individual companies. Therefore, in order to turn a profit in 2021, investors need to accurately estimate which companies and segments are the most likely to bounce back from the present crisis and invest accordingly.
Getting the bounce back predictions wrong, however, can result in 2021 becoming an even worse year for some investors. Those that get it right will soar with the bull next year, or perhaps even earlier.
