T-Swift said it best...you need to calm down. All of you. Yes, I know exactly who you are. Right now we are seeing two distinct sets of investors flood the market. The first set are the ones who are traditional investors, but seem to panic every time we get a bit of bad news regarding the economy or a second wave of COVID-19. We all know the economy is not going to return to pre-COVID levels for a long time; at least a year or two. That being said, daily economic reports shouldn't deter you from your overall LONG-TERM investment strategy. When the market drops a bit, dollar cost average in names that are winners!
The second group of investors are millennial-aged people who view the stock market as a casino and want to get in on the recent rally in stocks. The problem is, they waited too long and they entered towards the top of the market and created froth in stocks that are either unprofitable, or are going BANKRUPT! That's right, people are investing thousands of their hard earned money in companies who have recently declared bankruptcy. This doesn't make any sense at all and people will get burned...and have been in recent days.
They are investing in companies like Hertz, the airlines, the cruise lines and all of the retail names that have been beaten down. Now, not all of these names are bad. Investors need to study the financials of these companies before they make an investment in them. I'll admit, I bought shares of Delta and Carnival, but near their lows and I didn't commit a ton of cash to these names. I found these two to be the best in a bad group of stocks and have a long-term view, so I can see these names being higher 5-10 years from now.
Investing in the stock market can be a lot of fun, but it's also dangerous. This isn't Las Vegas. As quickly as stocks can go up, that's how quickly they can fall. Study before you buy. Learn the company inside and out and make sure they are profitable, or if they are a growth stock, determine if they have a clear path to profitability.