Opportunities in today’s market
The most frequent question clients ask me is, “How can I take advantage of the current depressed market? Should we be buying now since prices have dropped so much? ” I emphasize that the current volatility will probably continue for some time and the market could go even lower. However, there are several opportunities.
- Low Prices: If you have spare money, this could be a good time to add to your current investments to take advantage of low prices.
- Dollar Cost Averaging: You can take advantage of market volatility by periodically adding to your account, such as each month. This is called Dollar Cost Averaging .
- Roth Conversion: This is a good time to convert your IRA to a Roth IRA. The conversion is taxable. But taxes are less when the conversion amount is less.
Current Market Risks
- The coronavirus could get worse, once stay-at-home bans are lifted.
- Growth might not pick up as much as expected once lockdowns end.
- First quarter GDP when announced the week of April 26, 2020 could be worse than expected.
In spite of these risks, most markets turn before recessions end. Therefore, taking advantage of depressed prices by investing in quality companies now could be a wise move, so long as you have patience. But keep some money in cash to take advantage of any further market declines.
For additional information, please contact us.