Are We About To Enter A Lost Decade?

The current situation has a lot of investors on the edge of their seats. On the one hand it seems like we are on the edge of World War 3 as Russia is trying to invade Ukraine. On the other side we have the stock and crypto markets that are showing steady increases week over week. But behind all of this there is a simple fear: Are we heading into a lost decade of investments? In this article I will discuss a few points that might indicate this suspicion as well as talk about what we can do about it.

Hard Times Ahead

With the current situation, hard times seem to be a matter of time. It looks like the economy is heading in a state of stagflation where the industry is not growing as fast anymore, and the inflation numbers keep raising. Furthermore, we have the constant money printing. In fact, since the start of the pandemic around 80% of the total printed money was printed. That is just insane. Not only that, due to the geopolitical situation the prices of commodities like oil and wheat are going trough the roof. And to top it all of there are already talks about the Change of the World Order in which the US is on the declining part and China is on the way to become the next superpower. All of this information leads to a lot of fear and uncertainty which will be reflected sooner or later in the markets which will most likely result in a so called “Lost Decade”. Essentially, this term describes a decade of investment where you the market index will be the same after 10 years, meaning that investors will not make any money after these 10 years.

Investor Exodus

These thoughts are everywhere and they will not stop anytime soon. This is why a lot of people are already leaving the stock environment. To understand this, we need to look at the distribution of investors. It is well known that many investors started once the pandemic hit the globe. Thanks to the stimulus checks many people had some additional money that they were able to invest. This lead to a lot of cashflow into the markets and people saw record breaking years in the markets. All of this was also accelerated with applications like RobinHood that made the barrier of entrance into the stock market non existent.

The problem that we are facing now, is that many of these investors are not experienced enough and have very likely paper hands. All of this uncertainty and fear is making a lot of investors quit and try to save what they have left from their pandemic gains. This is leading to a true investor exodus which adds a lot of sell pressure on the stocks and many Alt Coins as well. This effect would certainly help the effect of the Lost Decade.

Right Strategy

All of this sounds very scary and not motivating at all. But is this really a bad time to invest? If you are just planning to invest a bunch of money now and not care about the markets from this point onwards, then I would say yes. This truly means that after 10 years time there will be no gains to be seen. But if we look at it from a Dollar-Cost-Average Perspective, I think that investing throughout a lost decade can make a lot of sense. Of course this requires a lot of strength and believe but I think once the trend goes back up, people will be very happy to constantly invested during a lose period. Like we all know, it is very hard to predict the true bottom of a market, that is why investing in a constant period of time is the only plausible solution to this problem in my opinion.

Published by ga38jem on
Steemit
On 26th March 2022