Stock Market Insights by Felix Prehn: Navigating Fear and Opportunity
Felix Prehn of Goat Academy explains how global events like the Israel-Iran conflict impact the stock market, and shares strategies for smart investing in uncertain times.
Felix Prehn, the founder of Goat Academy, shares his perspective on the recent stock market turmoil following the conflict between Israel and Iran. Many investors are feeling anxious as markets react to global events. Felix Prehn explains how to understand these changes and make smart decisions, even when fear is high.
Understanding the Impact of War on Markets
When major world events happen, like the recent attacks between Israel and Iran, stock markets often react with sharp drops. This can make investors nervous. Felix Prehn points out that while these events are serious, history shows that markets usually recover after wars or conflicts. For example, after the Vietnam War, Gulf War, Afghanistan War, and the Iraq War, markets bounced back. Even during the 2014 Crimean crisis, the market recovered over time.
What Should Investors Do?
Felix Prehn advises investors not to panic. He suggests that long-term investors, especially those who own index funds like SPY or VOO, should remember that the U.S. economy and large companies like Microsoft, Apple, and Nvidia are still strong. These companies’ earnings are not directly affected by short-term conflicts. Selling during a panic often leads to regret, as markets tend to recover.
For those who trade individual stocks, Felix Prehn recommends sticking to your rules. If you use stop-loss orders (automatic sell points to limit losses), do not change them just because of world events. The same risk management rules apply, no matter what is happening in the news.
Sectors That Perform Well in Uncertain Times
Felix Prehn highlights that certain sectors often do well during global uncertainty. Energy stocks, such as oil companies, and defensive stocks, like those in the defense industry, have been strong. Gold stocks also tend to rise, as gold is seen as a “safe haven” during crises. Some examples of defense stocks mentioned include Northrop Grumman (NOC), L3 Harris (LHX), and RTX. Gold companies like Groy have also performed well.
The Importance of Following a System
Felix Prehn stresses the importance of having a system and sticking to it. He explains that it is normal to have small losses, but the key is to let your gains cover those losses. He does not worry about every small drop in a stock’s price, as long as he follows his rules. This approach helps avoid emotional decisions and keeps investing on track.
Lessons for Investors
Felix Prehn’s main message is to avoid panic selling and to look for opportunities when others are fearful. He suggests looking for quality stocks that have dropped for no good reason, as these can be bargains. He also reminds investors that the economy is still strong, and good companies will recover.
For more information about Felix Prehn and Goat Academy, visit the About page.