Strats Flashcards
We don’t truly know when is the best time to buy a stock, how can we fight against this?
Dollar Cut Averaging
Dollar Cut Averaging
An approach to buying stocks that reduces risk of market changes in which the the buyer spreads out their purchases of stocks (e.g. buying 100$ worth of shares of Company A at the start of each month). This means that for the shares you have bought, you will have paid an average price. This is much better than buying all the shares at once as you don’t know if the company’s stock will start to decrease.
Recession
A period in which economic activity has declined/GDP has been down for over 6 months
GDP
Gross Domestic Product - The total output of an economy. Output referring to the value of final goods and services sold.
Something useful to do before a recession.
Save money to later invest when stocks are low (This also applies to real estate etc.)
US Stock Market always recovers after a recession which means what to you as an investor?
Profits. Buy the stocks when they are low and sell them once the stock market recovers (if that is your game plan, buy low, sell high). But in general, buy more stocks during a recession.
What is a good strategy during a recession?
90/10 Formula
90% of your stock market budget is allocated towards index funds and potentially ETFs
10% of your stock market budget is allocated towards to more risky, long-term plays. For example, individually investing in small, undervalued companies.
