To The Moon

In my last article, I expressed how we have just entered the second phase of the bear market where corporate earnings start to fall due to weak consumer demand. This thesis is supported by Michael Burry, who claims that despite the worst start to a year in five decades, we are only halfway through the bear market. Even Chicken Genius Singapore said in his latest video that he is bearish in the short term as he expects earnings to fall.

The current macroeconomic issues definitely pose a heavy challenge to US companies as consumer sentiment starts to fade in anticipation of an inevitable recession. Since the start of the year, companies have been issuing weak forward guidance as they struggle to satisfy investors who have been expecting a post-pandemic economic boom. This led to phase one of the bear market where we saw the stock prices of the most overvalued tech companies being hit the hardest due to multiple compression. That being said, the $S&P 500(.SPX)$is still 10% above its pre-pandemic high and could continue to fall as the economic situation in the US deteriorates.

So how should investors invest during this period of uncertainty and turmoil in the markets?

Instead of trying to time the market, investors should capitalize on falling stock prices to buy shares of high-quality companies with solid businesses that will continue to thrive despite macroeconomic challenges. While this may require a bit of homework on the part of investors, understanding businesses can help to create opportunities for investments. Over time, through the power of compounding, investors who invest in great businesses will be able to beat the market and achieve high investment returns. Therefore, I strongly suggest investors not to be disheartened by their paper losses but instead focus on learning about investment opportunities by getting to know businesses better.

As Warren Buffet once said, "Only when the tide goes out do you discover who's been swimming naked." I believe that this bear market presents great opportunities for investors who have a long investment horizon and have the patience to sit through volatility and drawdowns. As more earnings and news come in, investors will be able to distinguish the high-quality companies from those that have sustained themselves through a decade of easy money. Therefore, I believe that while investment returns have been dismal for the first half of 2022, forward-looking investors who stay invested and are vigilant in identifying new investment opportunities will outperform those investors who have abandoned the markets out of fear of falling stock prices.

@TigerStars@CaptainTiger@TigerEvents