April 24, 2024
Is a full-blown war going to escalate between Israel and Iran?!
How will this affect you as an investor? Read more to find out!
Updates on Israel and Iran
Last Friday, Israel launched a strike on Iran. This is a retaliation for what Iran did just a week ago when they launched over 300 missiles and drones!
I have shared some of my views on this in last week’s Wealth Pulse with the community. If you have yet to join, and you are interested in finding key market updates that the GoodWhale team shares, do join our weekly sharing!
The attack by the Israelis was targeted near a major air base and the nuclear site in central Iran. For those who want to know the specifics, “a central part of the S-300 air defense system at an Iranian air base in Isfahan was it”, according to a post on X from Iran International English.
In short, the attack was precise and Israel managed to evade Iran’s radar system and attack an area that is near an important Iran stronghold, a nuclear site. While the attack was much underwhelming in comparison to what Iran did, it does appear that Israel was deterring another direct attack on Israel.
Will things escalate?
The team at GoodWhale 🐳 hopes that such tensions can be resolved soon. The sooner the better!
What was observed was that articles circulating on the web suggested that both Israel and Iran were playing down this attack. This may be to prevent recent acts of violence from escalating into a full-blown war. Away from the Middle East, the U.S., and the U.K. imposed new sanctions to impact Iran’s economy. This comes with the hope to reduce escalation of a potential war 2.0. They are mainly targeting individuals and entities like UAVs, drones, material producers, and automakers.
That said the market have turned into fear mode. It could be due to uncertainty around potential oil prices surging, or even the U.S. interest rates that is still not lowering.
Source: CNN Fear and Greed Index
When the Fear and Greed Index shows fear, it meant the share price have retraced. to be exact, it has declined 4.5%. Will it continue to decline? Read more to find out 3 things you can do to protect and grow your portfolio in the long run!
3 things you need to know to protect and grow your portfolio!
The market has gone into fear mode for a couple of reasons. The escalation of the war in the Middle East may mean that Iran, the third-largest oil-producer OPEC member, could affect the oil supply, causing oil prices to go up and waterfalls down due to increasing inflation.
1.Macro and Fundamentals are linked but not in tandem
The macroeconomic state may be looking into an extended period of curbing inflation if said oil prices escalate. The interest rates may remain high to reduce spending and inflation. Yet, the previously positive hints of lowering interest rates in the second half of 2024 may not materialize and that means…Forward-looking projections of businesses will be recalculated and potentially reduced growth.
Despite the top-down approach seemingly bearish, what makes a company’s perform is its fundamentals.
Is the company continuing to perform and grow over time? Is your investment thesis about your holdings intact? If your answer is a yes, continue reading point 2. If not, determining if the cause is a short- or long-term problem will reinforce your decision to sell away the shares
2. Reduce risk by capital recycling or averaging down
This segment depends on your entry price which may greatly differ from others. If you have bought low and the share price have appreciated greatly, you are looking at a positive growth in portfolio. On the contrary, buying at a high and when the share price crashes, your portfolio will be seeing the reds.
Investing is all about managing your risk to reward. This is why doing your due diligence in knowing the business model, management, and financials matters. Once the “homework” is done, the next thing to reduce your risk is to enter at a discounted price or when the opportunity arises amidst crises.
Capital Recycling
You’ve got your entry price, so what should you do?
If your holdings have risen in share price and you are making positive returns, congrats! A way to lower your risk is to get back your capital so that you still hold some positions, yet your initial capital is back in your pocket as cash! Risk-free! Sounds great? Cash is king which you can redeploy at discounted prices when the opportunity presents itself.
Of course, doing capital recycling has its cons, so let’s expand that for another day 😉
Average Down Your Positions
Now, if you are as unlucky as Frane Selak, where your stocks always tank after you enter, then a way for you to reduce your risk is to do averaging down.
You may have bought some positions at a high and the price has crashed. The share price retraced and you are in the reds. Same thing, before you consider exiting, make sure you revisit point 1 on when to sell.
If the investment thesis remains intact, the best time to lower your average entry/ buy price is during these moments!
By lowering your average buy price, you will start seeing profits much faster than if you did not average down.
Of course, your emotional stability has to be strong to buy more shares much lower than your entry price. You need to convince yourself to invest more money to accumulate more shares.
This is where having a regular savings habit is crucial to accumulating wealth successfully! You need to have cash flow into your investment portfolio so you can use it to compound over time!
For those with no saving habits, it is the best time to start now! It doesn’t matter how much you are saving at the start. The key is to build up the habit and slowly save up more as you progress in your career or life while enjoying life!
3. Start generating multiple cash flow streams
I have yet to see someone that preaches “one cash flow stream is all you need”!
There’s a clear reason why! If you ever rely on one source, you are putting yourself in a risky position. Yes, you could be enjoying many years of income from this source. The amount could be substantial!
Yet, just like investing, you never want to put all your eggs in one basket.
Nothing is permanent. If this source was ineffective in generating cash flow in the future, THAT’S IT! Game over! One of the common goals is to generate sufficient passive income to support your expenses, especially for working adults.
If you want this income from dividend-giving assets, backtrack from your expenses to determine the capital needed.
For example, Whalie wants a lifestyle that spends $3,000 a month. To get it passively with a conservative average yield of 4%, Whalie will need $900,000!
Can Whalie grow his portfolio to $900,000 before he is financially free at the age he wants?
There are 101 ways to make money. Most importantly, is it consistent, and predictable, and what meaning do you get? These are some considerations.
One of the ways many of the community members has profited is by utilizing options. Options trading works in any direction whether the market goes up or down, similar to trading. Both rely on signals!
If you have always wanted to explore building another income stream or have your portfolio reviewed, fill up this waitlist now. I am keen to have a call with you!
For more intriguing articles,visit GoodWhale.com
