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I have a sizeable amount of money to invest (about 80 thousand). With the market having dropped so sizeable I want to get into the stock market now to try to benefit from the eventual raise in the market.

This money is all allocated to charity eventually, which means that I don't need it to survive. I can afford to take high risk (if the potential return justifies it). I also don't need a quick profit, I can wait out the market until it raises again, even if that took some time. I don't really care if I donate the money next month, next year, or next decade so long as it optimizes the amount donated when it does happen.

On the down side i don't follow finances too closely, and am not equipped, or willing to put in the effort, to do a detailed analysis of various potential investment strategies. I assume that limits me to a few stable investment options. Highly stable high dividend paying stocks, or investing in one the large indexes? Since I want to exploit the current low market I assume that would mean targeting areas hit worse by the Corvid-19 fears, but I honestly don't know what industries those are or how to target them with minimal investment experience.

What are good areas for me focus on that are likely to see eventual high gains without requiring too high an effort or understanding in trading from me?

  • I won't attempt an answer, but since I was going to ask a similar question...did you think about oil? No way the current prices are going to last. – DeltaIV Mar 22 at 9:35
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    @DeltaIV Oil has no mechanism for return. Bonds pay interest, real estate pays rent, forest grows, art (in a museum) results in ticket fee income, stocks pay dividend, but what would be the return mechanism for oil? Oil just ... is. One barrel of oil today will be one barrel of oil in one year. It does not grow, it does not become more than it is today. – juhist Mar 22 at 13:01
  • @juhist also Tesla stocks (or was it Amazon?) don't pay dividends, but you can profit by buying & selling them. Could you do the same with oil, or is it impossible to exchange it on the stock market? Honest question, I have no idea. – DeltaIV Mar 22 at 17:05
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    Yup, I have Tesla. It does not pay dividend right now, but that does not matter. It will eventually start paying dividend when the profits cannot be reasonably reinvested. Sometimes it's not current dividend; sometimes it's the future dividend expectation. – juhist Mar 22 at 17:33
  • It's too soon to buy oil unless going with weekly trends. But oil can be bought on the stock market with ticker USO which is a fund of unleveraged futures contracts. Also, oil trading companies buy physical oil at the spot price, store it, and sell it to the future at high premiums. An investor could just sell oil futures and gain the contango premium but what is their balancing position ? If they sell a long-term futures and buy a short-term futures that's a bull spread and not a pure contango play. – S Spring Mar 22 at 17:42
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What are good areas for me focus on that are likely to see eventual high gains without requiring too high an effort or understanding in trading from me?

A low-cost stock market index fund. Preferably one that is internationally diversified. If you can't find an internationally diversified stock market index fund for low cost, buy market-specific funds to create an internationally diversified stock portfolio.

If you want gains without the effort, there's no good competitor for index funds.

The US stock market is rather highly valued when compared to e.g. European market, so if you want to make active adjustments to your portfolio, just buy a little bit more European stocks and a little bit less US stocks. But, if you can find an internationally diversified index fund, it would be just easiest to buy shares of it.

Picking individual stocks requires effort. I do it, not because the effort would pay off, but because it's a hobby for me. I like analyzing companies.

If you don't need the money right now for emergency fund, and are planning to donate it to charity, I would advise to go all in to stocks. So, just buy a large investment for index fund quickly. That option has the highest possible expected return.

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  • What do you mean by 'buy a large investment for index fund', Are you referring to individual stocks, can you give example pls ? – Orange Juice Jones Mar 22 at 16:34
  • No, not individual stocks, but rather buy the fund. For example, if the fund is ETF, you buy it from the stock exchange. Otherwise you have to see information from the fund manager website about how to invest. – juhist Mar 22 at 16:47
  • I actually want to pick UK stock from FTSE100 (long term to go long), what criteria should I look for? i.e. low debts and high equity on balance sheet? – Orange Juice Jones Mar 22 at 17:03
  • Just get a brokerage account and some ETFs or mutual funds. For example, a Vanguard account and invest in VTSAX, VTIAX, etc. – ahaas Mar 27 at 1:13
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Since I want to exploit the current low market I assume that would mean targeting areas hit worse by the Corona fears, but I honestly don't know what industries those are or how to target them with minimal investment experience.

A popular brokerage firm provides a large group of sector mutual funds which depict the sectors hardest hit by coronavirus. The YTD performance as of 3/20/20 has been:

 Energy Service                         -66.6%

 Natural Gas                            -60.0%

 Energy                                 -58.6%

 Natural Resources                      -54.9%

 Air Transportation                     -50.4%

 Banking                                -47.0%

 Consumer Finance                       -45.6%

 Leisure                                -41.6%

 Defense and Aerospace                  -41.4%

 Financial Services                     -41.2%

 Insurance                              -38.6%

 Construction and Housing               -37.8%

 Transportation                         -37.7%

 Industrials                            -36.4%

 Automotive                             -35.9%

 Chemicals                              -35.8%

 Environment and Alternative Energy     -35.2%

 Materials                              -35.2%

 Semiconductors                         -33.1%

 Brokerage and Investment Mgmt          -31.4%

 Consumer Discretionary                 -30.6%

 Utilities                              -28.6%

 Gold                                   -27.7%

 Health Care Services                   -27.3%

 Communications Equipment               -26.7%

 IT Services                            -26.5%

 Retailing                              -26.5%

 Telecom and Utilities                  -25.9%

 Medical Technology and Devices         -25.8%

 Communication Services                 -25.1%

 Computers                              -24.6%

 Consumer Staples                       -24.1%

 Biotechnology                          -23.3%

 Health Care                            -22.7%

 Technology                             -21.5%

 Wireless                               -21.3%

 Pharmaceuticals                        -20.3%

 Software and IT Services               -19.7%

 Telecommunications                     -16.8%
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Find companies that have a large loss of revenue and a large amount of debt and those companies are at risk of re-organization in bankruptcy.

The lower debt companies in recent history have been the newer technology companies.

One measure to consider is the debt-to-equity ratio. And certainly consider revenue.

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I would personally recommend Airline industry. Airline stock prices have dropped drastically in the past couple of weeks, and they had a good probability of climbing back up after this passes. I wouldn't go all-in at once, but definitely airlines.

Some Examples:

DAL (Delta Air Lines)

JBLU (JetBlue)

BA (Boeing) (more risky kinda)

AAL (American Airlines)

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    I see it in reverse. Boeing is more than just the 737 max crisis. It's a defense contractor that the government relies for all kinds of military armaments: Bombers, jets, helicopters, ICBMs, its space business. Defense budgets will not be cut. OTOH, the airlines are going to have to be bailed out. Don't get me wrong. Everything will rally but I'd like to see what kind of restrictions will be placed on airlines in return for that bailout. – Bob Baerker Mar 22 at 10:24
  • Diversification is the only free lunch, therefore, I wouldn't recommend a single sector. It may be a good trade, I'd just like some diversification. The long term history of the airlines is pretty poor. Maybe that changes after this bailout, but it's an industry subject to lots of regulation that is also at the whims of commodity pricing (they need jet fuel) and saddled with a unionized work force. – RWP - Down by the Bay Mar 22 at 15:33
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    @RWP - On Hiatus Be Back Later - Diversification isn't a free lunch. All it does is spread the risk. It doesn’t prevent losses. In 2008, of the 11 sector SPDRs, the top 3 performing SPDR sectors were Utilities (-43%), Health (-37%) and Staples (-31%). Does that sound like you got a free lunch? Equity diversification is down about 30% right now. The only way to mitigate such losses is proactive disciplined risk management. – Bob Baerker Mar 24 at 18:44
  • @BobBaerker I don't think you and I are as far apart conceptually on this topic as you may think. I agree with the sentiment in your comment, and in fact, I think that it's brilliant! To tie everything together here, I'm coming at this from a CAPM+MPT+Risk Parity+Downside Mitigation where that last part can be best described as what you just laid out, really nicely done! Anyway, I really have to go, love to chat more when I return. – RWP - Down by the Bay Mar 25 at 15:10
  • @BobBaerker Bob, I was reminded of this concept again today reading an article about the black swan fund's return this year. i think this is like what you referenced, which i strongly agree with, i hope you like it: zerohedge.com/markets/… – RWP - Down by the Bay Apr 9 at 11:57

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