During the 2008 – 2009, stock market crashed throughout the world and triggered the collapse of several big US banks. It was a period of chaos and great uncertainties. Back then, even the Singapore government had to make the unprecedented move of guaranteeing all bank deposits till end 2010 to prevent bank runs. There were mayhem and carnage during the financial crisis.
There were also opportunities. There was one point I was very tempted to purchase Citi’s shares, which was trading at USD1.00 through my Philips Securities POEMS account. Citi’s shares was trading at rock bottom and anything below USD1.00, chances of it being nationalised by the US government would be very high. I did not proceed ahead to buy the shares as I thought the risk would be too much for me to take. Of course Citi survived the crisis and its stock subsequently recovered.
The “Great Financial Crisis” presented many good opportunities to make big bucks in the stock market but I was unable to fully utilize my Opportunity Fund back then as I was saving up for my wedding. What a shame! The 2008-2009 financial crisis was a rare window of opportunity for smart investors to make their fortunes.
Forget about making money during the bull runs, for wealth can most likely be made during financial crisis. During major market correction, stocks would trade at a bargain and this could be the best time for investors to find value stocks.
On the other hand, there are many investors who lost their pants investing in stocks with poor business fundamentals. During financial crisis, such stocks cannot withstand the brute market force and went into liquidation. To minimize such risks, always diversify your investment portfolio and don’t put all your eggs in one basket.
Traditionally, physical metal such as gold bullion offers hedge against market volatility and market crashes. This is because gold is viewed by many investors as the ultimate gold haven. Gold is also an excellent store of value and is a great asset to hold for wealth preservation.
In short, nobody can predict when the next financial crisis will arrive. But for sure, you would want to allocate your asset in different classes such as gold, stocks, bonds, properties and cash. In doing so, you would diversify market risks and achieve sustainable wealth in the long run.
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