0What should be our strategy for upcoming days as long term investor?
Goldman Sachs is leading organization which forecasts have been valuable for investors. Before the US market started to fall, Goldman came with the prediction of at least 10 per cent fall and the next day it started.
Now the report says the worst is over and the bottom is behind us unless there is a second wave of the spread of COVID-19. And it makes sense if we look at many factors. First of all, first and second quarter disruption in the economy due to natural disaster or pandemic should not be taken as recession fear because disruption is not due to slow in demand. So, once the marketplace opens (gradually), we will see economic activities peaking. Second, due to central banks intervention and government relief package for revival, will provide ample liquidity which ultimately has to be sucked by the financial system. As there is little minimum return in bonds, investors will have no choice better than stocks. Third, the stock market always runs ahead of events and generally bottom forms ahead of worst. And when worst comes, we see opposite movement most of the time.
Bottom line: If the world does not experience a second surge in infections after the economy reopens, the 'do whatever it takes' stance of policymakers means the equity market is unlikely to make new lows.
