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The most millionaires are created when markets crash, here's how - Kiana Danial

Kitco News

Bear markets create a large transfer of wealth from the investors who sell off their holdings during a market correction to those who buy on the dips, said Kiana Danial, founder and CEO of InvestDiva.com.

“It happens almost once a year but in recessions, that is when the most millionaires are made. The reason why is that all the [retail] traders that panic and sell off basically transfer all of that wealth to the people who keep calm and keep steady and buy the dip,” Danial told Kitco News.

Investors should avoid buying stocks that have generated too much attention from the general public. Undervalued assets are typically the ones being sold off, Danial said.

“A lot of assets are now at all-time highs but that doesn’t mean that they are still valuable because they’re actually now overvalued. We have to shift our head and look at a different asset that is undervalued. That is what we are on the hunt for all the time. More often than not, the undervalued assets are the ones that the noobie investors and traders who are just looking in and they don’t know what they’re doing are selling,” she said.

One of the best indicators of an overvalued asset is sentiment.

“If it’s trending on Twitter it’s probably hyped up,” she said.

Additionally, if a stock is showing a major uptick that is not typical of its long-term trend, investors should be wary that it’s being overbought.

“For example, Tesla is one of my favorite stocks to not hold, even though I’m a huge fan of Tesla,” she said. “It’s such a [hyped-up stock]…Elon Musk is a marketing guru. He creates all this hype. Every time the hype is up, I sell.”

Danial noted that since March, more women have been actively investing, creating a new demographic of investors.

“Since March…I saw this pour of moms coming into my website and staring investing and making a ton of money. Now, 86% of my students are women,” she said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.