After more than 10 years of patient waiting and accumulating my cash reserves, I am finally seeing some possible signs of the start of a market crash.
If you have been watching my videos, you will know that my ultimate investing strategy is to wait for a big crash before going all-in to scoop up cheap stocks for the long-term.
Many people have been asking me if the crash is over, but since many experts are still bullish, but do not offer concrete reasons for the bullishness, that itself is not a good sign.
At market bottoms, everyone (including experts) will usually be calling for the end of the world.
General Market Trend:
This chart here shows the worst case scenario for the S&P 500 (weekly chart), and if the market really does go all the way down, then it will trigger the entry prices for many of my entry prices for the stocks which I intend to buy.
However, as prices are unpredictable, I plan to scale in and buy in bits and pieces when I see good opportunities.
Let’s take a look at some of the potential drivers for 2019.
- US policies to boost economy ahead of elections
- Tech advancements to improve productivity
- Brexit cancelled?
- Interest rates increasing and more hikes to come
- Trade war with China
- Nuclear threat of North Korea
- Brexit woes
- Falling U.S. corporate profit margins
- Record high U.S. corporate debt
- Illiquidity in the U.S. corporate bond market
- Extreme, costly climate events
- A eurozone crisis
- Europe needs negative interest rates to fight recession
- Loss of jobs due to tech advancements and automation
- High inflation in emerging markets
My preferred sector is the tech sector, especially after my 1-month trip to Silicon Valley last year.
Why Focus on the Tech Sector?
- As more jobs get automated, the surplus gains will go to the big tech companies
- Tech companies will expand by buying up the best of the non-tech companies
- I read somewhere that in 10 years there will only be 100 companies, and in 50 years there will only be 10 companies
- I prefer to pick the big ones because they will “eat up” the smaller ones
My Top Picks & Entry Price Levels:
- Facebook (FB) – Entry price: $80
- Google (GOOG) – Entry price: $750, $600
- Amazon (AMZN) – Entry price: $1000, $700
- Apple (AAPL) – Entry price: $130, $100
- Microsoft (MFST) – Entry price: $85, $60
- Netflix (NFLX) – Entry price: $200, $125
- Tesla (TSLA) – Entry price: $250, $180
- Baidu (BIDU) – Entry price: $130, $90
- Alibaba (BABA) – Entry price: $110, $85
- Tencent (700) – Entry price: $220, $170
Yar, I know it seems too cheap, and prices may never get there, but one can hope. 😀
Other notable potential IPOs in 2019:
- Didi Chuxing
I am pretty confident the next wave of financial and economic gains will go mainly into the tech sector, with the focus on applications of AI, machine learning, data science into every aspect of our lives. The biggest winners will be those who own the algorithms.
That said, there will also be risks, such as increased regulation or anti-monopolistic backlash, which could negatively affect the stocks.
Good luck, and get ready to buy and hold for the next 10 years! 😀