A lesson I learned from the Market

In the past 2020-2021, it was the carnival for the stock market, while the Fed Reserve was injecting unlimited dollars into the Market. SP500 index increased from 2584 points on 3/1/2020 all the way to the historical peak of 4766 on 12/1/2021; Meanwhile, the NASDAQ index changed from 7502 to 16057. Can you imagine this kind of pump? Everyone was talking about how easy to earn money in the market, and everyone was thinking his performance was better than Buffett’s.

However, in 2022, as inflation surges, Fed Reserve finally start to increase the rate and withdraw money from the market. The stock market is pullback a lot. As of Today, SP500 drops to 3978, while NASDAQ is at 11413. The whole market is at the edge, or we can say, already in the bear market.

As a consequence, many high growth stocks, which price, was double or even triple increased during the pandemic, drop significantly, such as Nvidia, AMD, Paypal, Netflix, and Zoom. Even Apple, Microsoft, Google, and Amazon, these giants, cannot avoid their stocks recession. I just post 2 figures to let you have a direct feeling about how the price dumps steeply.

Netflix drops 63.37%

Even Apple, their price drops 22%!

So, as a shareholder of Nvidia, Apple, Microsoft, and Paypal, I experience the extremely high pressure of loss. I have to admit I was a little bit obtuse this time to adjust my portfolio. When you look at your account that every stock is up 50 or 60% at least, it is really difficult to adjust. It needs courage.

But life has to continue, as Buffett says, you must keep investing, no matter whether the market is bear or bull. He also mentioned, timing the market is very difficult. Therefore, what we can do, is choose the best value companies or ETFs, and hold them no matter the market change. The only thing we need to concern is diversifying the holding, not focusing on the high-growth stocks.

Recently, I am adding these ETFs and stocks to my portfolios.

iShares S&P GSCI Commodity-Indexed Trust ETF(GSG)

This ETF aims at all kinds of commodities, including energy, metal, and agriculture products. We all understand that during inflation, commodities prices will keep going up, so this ETF will provide us a good return(YTD return is 42.67%).

SPDR Gold Shares (GLD)

No matter what time period, gold will always provide some value. When the time is going tough, the gold prices will increase. So I also added this ETF to track the gold. The holding percentage is very small, but I will hold for the long term. (YTD returns 0.62%)

Consumer Staples Select Sector SPDR Fund (XLP)

This EFT holds companies that have been identified as Consumer Staples companies from SP500, including Costco, Walmart, and Coca-Cola. During the inflation, consumers may decrease other spending, but they can not avoid spending at Costco, or Walmart. So although TYD’s return so far is -7.85%, it is much better than high-tech stocks, and I will keep it for the long term because I believe it is stable no matter the market.

Based on the confidence in the consumer company, I also pick up some stocks in this sector, including:

Coca-Cola(KO), TYD return 6.91%

Costco(Cost), Walmart(WMT), and Target(TGT), recently these 3 stocks decreased a lost, so I just buy the dip as I am confident for the long term.