Are We At the Bottom of the Market?

It is not easy to tell what the FTSE 100 index bottom is. However, we can see when a stock market crash starts. Further, we know that it can take a long while before FTSE 100 finds its groove again. This information tells us two things. One, our investing window to maximise capital appreciation. And two, our waiting period before we can start seeing growth in our investments.

So how long is the investing window for the FTSE 100? If we go by the Wuhan example, the lockdown lasted for two-and-a-half months. This means that if we are in lockdown until the start of June, we could continue to see market uncertainty for the next two months or so as economic activity stays muted. This in turn gives us the opportunity to invest at relatively low share prices. All we have to do next is wait for around two years before we can start seeing the fruits of our investments. However, we still need to make judicious investment calls.

Experts like high-quality FTSE 100 growth stocks and recommend closely examining stocks that are trading at a sharp discount compared to their pre-crash levels. Airlines, for instance, have been hit hard by lockdowns. But, insofar as they are well run companies otherwise, most expect them to come back to health once the coronavirus crisis subsides. Or you may go for safer defensive stocks. We need to be careful before investing in companies whose fortunes are tied to discretionary spending. Their demand may not bounce back in the foreseeable future. Whichever way we look, the moot point is that there are investing opportunities available, and you can start making the most of them now.