Tragedy to Opportunity

A good article I found to enlighten all of you on the current situation.. It's now up to you to turn tragedy into opportunity!!

Extracted from Adam Khoo: Why I Love Market Crashes and You Should Too!

The US market indexes like the Dow Jones, S&P 500 and Nasdaq have plunged more than 25% from its highs! Once revered ‘indestructible’ financial giants like AIG, Lehman Brothers, Bear Stearn, and Merrill Lynch have come crashing down. Citigroup that once traded at $50, is now down to $13. Lehman Brothers than was once $90 is now bankrupt. Merrill Lynch that was once $80, is now $20. AIG that was once $80, is now $2. Global corporate layoffs have started with HP slashing 24,000 jobs worldwide.

In Singapore, the Straits Times Index is down MORE than 30%. UOB, once at $24, is now at $15. Capitaland, from $8 is now $3+. Property prices are down 10%-20% from a year ago. Singapore has declared herself facing another 'technical recession'

While many people are panicking and fear can be smelt in the air, Far-sighted Entrepreneurs and Investors like myself are LOVING IT! (not that we ate any McDonalds’s burgers)

So Why Do I Love These Downturns?

I may sound crazy, but most people do not realize that economic slowdowns and financial crisis are where fortunes are really made.

It was the last two crashes of 1998 and 2002 that gave me the opportunity to make my first $1.5 million; by buying into great stocks at huge discounts and turning an $8,000 investment into a $30m a year business. It was the recession that allowed me to hire so may great people at such low salaries, take up a 12,000 square foot office in the heart of CBD at just $4 per square foot. It was during the crashes, when NOBODY wanted to own stocks that I bought great blue chip stocks at 50%-80% discounts below their true value. It was during the last downturn that I bought my Semi-D at $1.6m, which is now worth $3m!

Now…it is ALL HAPPENING AGAIN!!!! In fact, this crisis is turning out to be even more severe that the previous two. For those of you who know how to take advantage of this will become the next group of new millionaires once the market turns around.

How Do You Take Advantage of This?

Remember that history ALWAYS repeats itself. After every bull run (rally), there will be a pullback/correction/crash (which is what is happening now). After every crash, it will be followed by the next rally/bullrun. In other words, the market will ALWAYS RECOVER and GO EVEN HIGHER!

However, NOT ALL stocks will recover. The weak and fundamentally damaged stocks may never recover. The secret is to learn and start buying up the fundamentally strongest stocks when they are cheap & NOBODY wants them (during the downturn). When the market turns around, they are the ones will recover even stronger and make you your fortune.

Let me give you a free tip here. Before the crisis, there were Five Big Investment Banks in the US: Lehman Brothers, Goldman Sachs, Merrill Lynch, Bear Sterns and JP Morgan. Now that Lehman (bankrupt), Merrill (bought over By Bank of America) and Bear Sterns (bought by JP Morgan) are gone, guess who is going to benefit and become even stronger after the crisis… the survivors! i.e Goldman Sachs and JP Morgan.

You need to identify the strong companies from the lousy ones and to buy them up cheap, when the whole market is fearful. When the market turns eventually, they will reap handsome profits from putting their money on the strong horses.

“Be fearful when others are greedy and greedy when 0thers are fearful”
-Warren Buffett, World’s Richest Man