The latest interest rate hikes made investors nervous in 2018 when the Federal Reserve raised prices four times between March and December while lowering bonds on its balance sheet. The Fed has already increased interest rates by 0.75%, and earlier this month, it said it would begin to reduce the amount of loans and bonds held by the Treasury from June.
The slogan "Don't Fight for the Fed" has contributed to a nearly 30% drop in NASDAQ stocks since the November rise.
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The S&P 500 went better, but dropped by about 20%. And Treasury bonds have also been hit hard. For example, iShares 20-year Treasury ETF (TLT) - Get iShares 20+ Year Treasury Bond ETF Report down over 23%.
The decline in indicators only points to fears in the market this year, however. Many stocks have done the worst. For example, the cryptocurrency exchange Coinbase (COIN) dropped by 84%, and fintech darling Upstart (UPST) - The report lost 92% of its value since its rise in October.
The despair is so high that you may wonder what you have done. If the past is a prologue, then 2018 suggests buying bargains.
Great Winners in Danger
It is difficult to buy stocks where everyone sells them, but doing so pays off from time to time, including 2018.
In 2018, the SPDR S&P 500 ETF dropped 20% from the top of Sept to Dec 31, while the NASDAQ 100 (QQQ) - tech index- heavy covering 100 major shares - lost 23%.
Entering a dispute at the time was the last thing investors wanted to do after seeing their account balances fall that way in just three months.
Each stock has done even better. Since the biggest fall in 2018, Amazon (AMZN) - Report, Google (GOOGL) - Class A Report, Microsoft (MSFT) - and Apple (AAPL) - increased by 64%, 131%, 172%, and 289%, respectively. You are still going up by a staggering 1,137%, despite a more than 40% drop from November, if you buy Tesla (TSLA) That is a return for the heads, but it did not come easily.
Buying market risks takes the metal sensors and the willingness to make a mistake in the short term to get a long-term reward.
How You Play The Market Now
It can't be said which stocks will be the biggest winners coming out of the 2022 bear market, but from time to time, it pays off to be optimistic about the future of America.
Probably, Warren Buffett put it well when it comes to financial problems when he wrote in Berkshire Hathaway's Yearbook in 2009.
