The term “market crash” has been used very loosely, especially on social media, YouTube and blog space to attract more attention.
I personally think that what we are going through now and will continue to go through is a deep market correction and not a market crash.
The tech stocks and chip companies are falling hard because they have more than doubled since 2020, all thanks to the pandemic and people staying at home, and demand for digital products and services rising exponentially.
The speculative stocks and stocks of companies that are not making profits or not having cash reserves aka the growth stocks are also declining and it makes sense because they have been inflated in the past year through a huge inflow of stimulus money into the market together with all the speculation going around to make their share prices go higher.
So, this correction is bringing everyone back to the level where they are supposed to be. In value investing, this level is also known as their intrinsic value.
A market crash usually happens unexpectedly where there is a major event that triggers a rapid and extreme selloff, such as the collapse of Lehman’s Brothers, where S&P 500 fell more than 20% in a short period.
If we have the time to prepare for a crash, way in advance, then it will not be a crash eventually. Also, the Federal Reserves will not want to be held responsible for a market crash, especially midterm election is happening this year (2022).
Imagine the great sufferings of the people losing their savings or jobs when a crash happens and the economy goes into recession, no government would want to be remembered in history as the infamous one who cause that.
However, I do believe that once this round of correction is over, the market will stay sideways for the most periods because of the lack of free money flowing into the market through the Federal Reserves’ money printing machine. With interest rates set to rise, investors may choose companies who are able to raise the prices of their products/ services and continue to sustain their profits over the quarters.
My strategy would be to invest in fundamentally strong companies with huge cash reserves and have strong moat and pricing powers. I will leverage on selling covered calls and cash-secured puts to earn a consistent monthly income when the market trades sideways.
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Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread
Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
MY TRADES
Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)
I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day
I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021
This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months
Learning Investment With Jason Cai 