According to Bloomberg source, there is a nice chart that shows the co-relation between how Oil and stock market moves in tandem. When Oil is up, market is up and vice versa.
To prove its point, I use the 4H chart and see for myself if it is true. Notice the difference in timing of the fall. DJI peaks at 29,559 on 8 Jan 20 and also marks the beginning of the downfall.
Slightly more than a month later, Oil follows as well. It peaks at 64.58 on 13 Feb 20 and begins its horrific plunge thereafter.
Now we know that DJI is already in the bear market as at yesterday. Many are expecting Trump speech will help to save the market but apparently, it did not as it sends it down by another 4% when it opened this morning.
Oil wise, we already knew about the horrific 33% plunge on last Monday , 9 Mar 20. Now, we have experts saying it would not see daylight until it hits below 20 dollars. Now, if both Oil and DJI are indeed co-related, does that mean we have more to fall for DJI ?
It is less important if this theory is proven right or wrong. Or if it is just coincidental since there can be many relationships that can be extrapolated from the up or down of a market. What is important here is if it is right ,what are you doing to your portfolio ? How are you insulating it from further losses ?
Do you have a back up plan ?
Are you dipping into your hard earned savings to meet the margin call ? (Feds can print unlimited money to meet the needs, we can't )
How concentrated is your portfolio ? Are they diversified or over 80% in tech or industrial materials?
Answering such questions in advance help you to structure a plan and act on it before the crisis hits, if it hits. In the words of Warren Buffet, never lose your capital.
Mind you, if you pay $1 for A company and it went up to $1.80 but you did not sell. Now, it is back to $1 and if you sell. On a gross basis, it seems you are equal but you forgot you have to pay for commission to your broker. Now, if you have 20-30 stocks in your portfolio, that sum is going to add up, which means you have lost your original capital. We are not even talking about the opportunity costs of holding during this period.
The one thing that is neutral is numbers and it does not lie. Profit is profit , loss is loss.
If you have been chasing the high since last year , thinking the stock market is on a never ending ride up to heaven, then you might be sorely disappointed that the music has stopped without much warning. Maybe, you are disappointed like many and frustrated that it has wreack havoc in your life, on top of the work now being affected by the coronavirus.
Try to compartmentalise things so that you dun lump them altogether and get overly uptight or stressed about it. Like a runner who encounter muscle cramp, aches along his marathon, he can either gives up and call it quits. Or he can rest a while and pick himself up again to complete the race.
Trading or investing the market is like running a marathon. Your very own marathon. You are not out to compete with anyone unless you are a pro. (then you would not be listening to me, haha)You just better yourself in each run, taking in the moments, learning from mistakes, getting better prepared each time, the gear, the warm-up, the practice, the amount of water, the shoe, etc.
“Either do not begin or, having begun, do not give up.”– Chinese Proverb
To prove its point, I use the 4H chart and see for myself if it is true. Notice the difference in timing of the fall. DJI peaks at 29,559 on 8 Jan 20 and also marks the beginning of the downfall.
Slightly more than a month later, Oil follows as well. It peaks at 64.58 on 13 Feb 20 and begins its horrific plunge thereafter.
Now we know that DJI is already in the bear market as at yesterday. Many are expecting Trump speech will help to save the market but apparently, it did not as it sends it down by another 4% when it opened this morning.
Oil wise, we already knew about the horrific 33% plunge on last Monday , 9 Mar 20. Now, we have experts saying it would not see daylight until it hits below 20 dollars. Now, if both Oil and DJI are indeed co-related, does that mean we have more to fall for DJI ?
It is less important if this theory is proven right or wrong. Or if it is just coincidental since there can be many relationships that can be extrapolated from the up or down of a market. What is important here is if it is right ,what are you doing to your portfolio ? How are you insulating it from further losses ?
Do you have a back up plan ?
Are you dipping into your hard earned savings to meet the margin call ? (Feds can print unlimited money to meet the needs, we can't )
How concentrated is your portfolio ? Are they diversified or over 80% in tech or industrial materials?
Answering such questions in advance help you to structure a plan and act on it before the crisis hits, if it hits. In the words of Warren Buffet, never lose your capital.
Mind you, if you pay $1 for A company and it went up to $1.80 but you did not sell. Now, it is back to $1 and if you sell. On a gross basis, it seems you are equal but you forgot you have to pay for commission to your broker. Now, if you have 20-30 stocks in your portfolio, that sum is going to add up, which means you have lost your original capital. We are not even talking about the opportunity costs of holding during this period.
The one thing that is neutral is numbers and it does not lie. Profit is profit , loss is loss.
If you have been chasing the high since last year , thinking the stock market is on a never ending ride up to heaven, then you might be sorely disappointed that the music has stopped without much warning. Maybe, you are disappointed like many and frustrated that it has wreack havoc in your life, on top of the work now being affected by the coronavirus.
Try to compartmentalise things so that you dun lump them altogether and get overly uptight or stressed about it. Like a runner who encounter muscle cramp, aches along his marathon, he can either gives up and call it quits. Or he can rest a while and pick himself up again to complete the race.
Trading or investing the market is like running a marathon. Your very own marathon. You are not out to compete with anyone unless you are a pro. (then you would not be listening to me, haha)You just better yourself in each run, taking in the moments, learning from mistakes, getting better prepared each time, the gear, the warm-up, the practice, the amount of water, the shoe, etc.
“Either do not begin or, having begun, do not give up.”– Chinese Proverb
Comment:
see how both follow each other nicely....
