Share market volatility has ballooned across the world in 2022. But rather than selling up and running for cover, I’ve been buying UK shares for the stock market recovery.
This way I hope to make big returns once market confidence eventually returns and asset prices rebound. Investment company eToro says that this is a strategy many other British share investors are also adopting.
“Standing their ground”
Nine in 10 investors are either holding onto their investments, or buying the dip. Thats according to an eToro survey of 1,000 Britons. By comparison, just 5% have sold their investments during the recent stock market correction.
eToro notes that 71% of investors have “held firm” while 24% have bought on the dip. Ben Laidler, global market strategist at the firm, explains that “the golden rule of investing is that ‘time in the markets beats timing the markets‘.
“So it’s encouraging to see investors, particularly those who are relatively new to investing, refraining from making any knee-jerk decisions when things became choppy,” he adds.
This is what I’m doing
Market sentiment remains extremely fragile right now. And stocks could plummet again at any moment on any one or more of the following issues:
- Signs that high inflation is here to stay.
- Larger-than-expected interest rate hikes from the Federal Reserve.
- Evidence of a long war in Eastern Europe.
- A surge in global Covid-19 cases.
I’m preparing for fresh stock market falls by building a list of top stocks to buy. This way I believe I can supercharge my chances of making big capital gains.
Believing in the stock market recovery
There’s no guarantee that a global stock market rebound will happen.
But I overwhelmingly believe that the market will bounce back strongly. And I think those who have the belief to buy in when things look darkest have the chance to make the biggest gains.
Indeed, waiting until the economic picture clearly improves could have a significant impact on an investor’s wealth.
As Sean M Pearson, financial advisor at Ameriprise Financial, recently told CNBC: “By the time the news looks a little bit better, the market has already recovered. And if you miss the recovery, there’s a very, very good chance you’re going to make it harder to hit your financial goals.”
Getting set for the bull market
I’ve already begun buying UK shares for the recovering equity market. And, as I say, I’m building a list of more value stocks to invest in when economic activity picks up.
Over the long term I could make stunning gains as corporate earnings bounce back, broader market confidence recovers and share prices surge from current levels.
Studies show that investors tend to make an average yearly return of 8% over a period of a decade, or more. And by buying beaten-down shares today, investors like me can potentially make even greater returns from their stock portfolios.