Opportunity in business is for those who are ready for it and not for people who do not have the intent and will grasp it. Investors have seen that within a decade, there are always opportunities for investors in the investing world, but the readiness of the investor matters a lot.
An average stock investment would yield between 6% to 10% annually, this is often calculated after a long period of time, and do not forget that in other to make reasonable profits, it is advisable to invest for a minimum of 5 to 10 years as investment will increase based on interest and compound interest but in all this, there are a few periods when investors become exceedingly rich as a result of being able to buy investment options as well as other assets at a fraction of their selling price. You do not understand, let me quickly give a simple example.
In 2008, we experienced the real estate crash after a long bull market in real estate which got banks looking at the industry as a place where profit is a sure thing, which led to the disbursement of mortgage loans to real estate investors and to people who couldn’t afford a house but wanted to buy them. After the long Bull Run, there was a bubble burst and people started to sell their houses for a fraction of the amount. At the point, certain people were waiting for the market to crash so they can invest, and when the opportunity came, they investment in both the physical owning of houses at a very low amount and in REITs at a fraction of the stock prices. Another one is n 2019, Warren Buffet said it clearly that he had about $122 Billion cash but was looking for a worthy time when the market would be down to invest. Impressively, the markets came all down at the beginning of the year 2020 due to the pandemic and all but a few stock prices went down. At this point, warren bought thee few investments he invested in at a very low price compared to its initial price. Buying stocks when the market is bloody is a good time as the market will always stabilize itself.
This also applies to buying businesses, as you never buy a business that is higher than its worth. When people want to sell their businesses, they do so because they either want to cash out of their investment to retire or start a new business. At this time, if the business is worth buying, having cash available for such opportunity makes it a great deal but if cash do not exist at the moment, it can become a very bad moment.
As I end this post, I must make it clear that the only way to be ready for opportunities is by always having cash available for such moments. At that point it is evident that cash is king and it is needed in days like that.