Between the market close on Friday, October 23, and that on Wednesday, October 28, the Cac40 lost more than -7%. While this is currently a stock market correction, it may be the beginning of a real crash similar to last March’s, following Emmanuel Macron’s announcement of a new lockdown. So, should we take advantage of this to acquire stocks at low prices? Here are our tips.
The Paris and Wall Street stock markets seem firmly rooted in the red, and this is not expected to change on Thursday, October 29, 2020. For several days, they have been pushed back by the increase in Covid-19 cases worldwide, particularly in Europe. But also by the lack of progress on fiscal stimulus in the United States, which exacerbates economic uncertainties. In this unstable context, as President Emmanuel Macron has just announced a new lockdown, is it wise to invest in the stock market? Many investors see the crisis as a chance to acquire updated stocks.
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The beginning of a new crash?
Indeed, in just a few days, the largest French stocks considered to be “safe” investments have declined significantly: since Monday, Kering and LVMH have lost -5%, Sanofi -4%, Air Liquide -6%, EssilorLuxottica -7%, and Total nearly -8%! And the smaller volatile stocks are not spared either. On the American side, the numbers are not better, as in just one day, Amazon and Apple fell by more than -3%, Microsoft by -4%, and Facebook by nearly -5%.
Impact: the Nasdaq 100 (which represents the 100 largest non-financial companies listed on the NASDAQ), which has recorded excellent performances for years and seems to withstand cracks well, has lost 3.23%. While this worries investors who are already well-positioned and see their returns drastically decline, it could be an entry point for those who have not yet acquired stocks, but think carefully about it… As a reminder, last March, the CAC40 lost nearly 40% in the midst of the crisis!
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An investment opportunity in the stock market not to be missed?
If you are one of those savers who have not yet ventured into stock market investment, the coming days could be an ideal opening to buy stocks cheaper than usual! Of course, we cannot predict what will happen soon in such an uncertain context and whether the March crash will happen again. But what is certain is that historically, the best long-term returns are found in the stock markets. We also explain this in this article on the best investments, with figures to support it.
Thus, we do not advise you to buy to sell as soon as possible in this context, but to buy at a good price with a long-term horizon. To avoid being a victim of stock market fluctuations, the Financial Markets Authority recommends investing for a minimum of five years. This way, you will benefit from the overall rise of the stock market with lower risk since you will have bought low dividends, but also, which come regularly.
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How to invest in the stock market
Now that you have decided, you may be wondering what the steps are for investing in the stock market? You will find all the necessary information to buy stocks on our site, here are the main steps:
- You will need to open a dedicated investment account: there is the ordinary securities account (CTO), the Equity Savings Plan (PEA), the PEA-PME, or life insurance. Discover the differences between these investment wrappers.
- Next, you must choose a stock broker, as buying stocks comes at a cost: fortunately, the best brokers charge little, if anything at all.
- Once your securities account or PEA is open, you can make your first purchases.