Throughout the stock market’s history, various opportunities have come and gone that seemed attractive at the time.
In many cases, such opportunities have soared in value for a period of time.
They then subsequently crashed, causing significant losses for investors who were late to the party.
One notable example is the dot.com bubble from 2000-2002, with the internet back then proving to be more of an evolution, rather than the expected revolution.
Bitcoin
This now appears to be the case with Bitcoin.
It surged in value to reach U$64,400 in mid-November 2021, with various investors stating that it could move significantly higher.
Since then, though, it has slumped by over 35% to US$41,470.
This has left a swath of investors nursing losses, with the cryptocurrency showing little sign of delivering a stunning recovery that would see its price rise back to its previous record high.
In fact, the virtual currency could sink further should investor sentiment decline over the near term.
And there are many reasons to worry, such as the outbreak of the Russia-Ukraine war and persistently high inflation.
Similarly, the price of Bitcoin is based on supply and demand, rather than any track record of performance or real-world value.
As such, it appears to be a gamble, rather than an investment, unless proven otherwise.
Stocks
Now let’s move on to stocks.
Of course, there are some who consider the stock market to be akin to gambling.
After all, it is possible to lose everything that is invested in stocks, should the companies involved go bust.
However, steps can be taken to reduce the risk of this happening, with the track record of various indices suggesting that, over time, investors who spread their risk and hold onto high-quality stocks often generate high returns.
Certainly, every investor makes mistakes from time to time and invests in stocks that lose them money.
Even the very best investors such as Warren Buffett make mistakes.
But if you park your money in growing businesses with a strong competitive advantage, the odds are generally stacked in your favour as a result of stock markets having displayed an upward bias over the long term.
Long-term focus
While investing in a portfolio of stocks for the long term may not sound especially exciting to many people, it is a tried-and-tested method for increasing your wealth.
Even buying during the height of a bull market has generated decent returns for a range of investors, since major indices have always gone on to recover and post higher highs.
In contrast, Bitcoin’s price could move sharply in either direction as its value is not anchored to either revenue, profits or cash flows.
Right now, Bitcoin hardly qualifies as a sound long-term investment strategy that can enhance your wealth and help you to retire happily.
While the potential for a sharp recovery in Bitcoin’s price may make it appealing for some in the short run, the stock market could be a far more superior option in the long run.
Although stocks may be taking it on the chin now due to macroeconomic and inflation worries, the strong stocks should bounce back eventually to post higher highs.
And you can even sweeten the deal for yourself by buying stocks that pay out a regular dividend while you wait for the recovery to gather pace.
If you’re a growth investor, having a resilient mindset is key to finding the next 10X stock. We show you how to do it in our latest free report, “Your Personal Blueprint to Finding the Next 10x Stock”. Click here to download it for free.
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Disclaimer: Royston Yang does not own any of the companies mentioned.
