With share prices expected to fall even further in 2022 and 2023, this is an excellent time for veteran investors and new investors to start investing their capital/money into the stock market.
Already, prices in the UK stock market have plummeted for specific shares.
For instance, share price punishment for Sabre Insurance Group (SBRE) was down 4.93%, Trustpilot Group (TRST) down 3.82%, and Portmeirion Group (PMP) down 2.38%. Results from these stocks from three days ago highlighted the extent of market jitters as London’s half-year earnings season looms into view.
The bad news is good news.
The reason for all this awful news internationally and domestically about the economy and the possibility of a recession in either late 2022 or 2023 is that with the possibility of the United States going into recession and inflation at a 40-year high, this will only increase the value of stocks.
Also, the UK is expected to fall into a recession like the United States, and China is also likely to not fall into recession. Still, with the possibility of market shocks, this may become unavailable.
The Chinese government In an attempt to soften the blow, China is already planning to pump $5.3 trillion into its economy—about a third of the size of its overall economy—through fiscal and monetary measures this year.
Quantitative Easing and how it affects investors
Quantitative easing— or QE for short—is a monetary policy strategy used by central banks like the Federal Reserve. A central bank purchases securities with QE to reduce interest rates, increase the money supply, and drive more lending to consumers and businesses.
Quantitative Easing (QE) has been used in the UK and US as an unconventional monetary policy response to the financial crisis. QE involves large-scale asset purchases by Central Banks, amounting to $3 trillion in the US and £375 billion in the UK, about 20% of GDP in both countries.
What does this information mean for investors?
Using qualitative easing means that the value of the UK pound and other global currencies is affected by QE, decreasing the currency’s value.
This means that investments in assets like gold will increase as the value of the currency decreases due to inflation and QE.
Investing in gold would be advisable, with the price gaining 6.5% and outperforming stocks over the first six months of 2022. Valero is Up 4.3% (energy company), and other mineral and energy assets will increase.
The combination of QE, an increase in inflation, and the possibility of a worldwide recession mean for investors that the purchasing power of a currency is known to be as decreasing due to inflation, leading to soaring house prices.
For investors or people wishing to generate cash by investing in the stock market, this economic cataclysm will mean that, with the panicking investors, high stocks will now be available at a much lower price.
Also, the increase in inflation will mean those assets will increase in the long term, even if investors need to wait 12 to 18 months after the stock market crashes.
With advice from investors like Warren Buffett, Robert Kiyosaki, and Tony Robbins, it’s not the panicked investor that becomes successful but the investor that keeps controlling their emotions.
The suggestion is simple: invest when the prices of stocks are low and sell when the price increases.
Your circumstances should be considered before investing, so you should consider taking independent financial advice.