We all are aware that stocks rise and fall all the time. However, sometimes it seems as though the stocks you own continue to drop and drop and your fear begins to rise and rise.
In this article we will talk about things that surely you have already read, but they are fundamental things, and that you should remember in times of falls like the current one.
1- No One Knows What the Stocks will do
When the stock market is up, everyone want to get in on something. The stocks will rise and rise and seem like they will never stop. Suddenly they start to drop and then the stock holders being to wonder if they should dump their shares before their shares are no longer worth a profit. When the stock price is down, people tend to not buy and wait for more.
My opinion is that nobody knows what the stock market will do in the short term, let alone the tabloid economic news. Do not get carried away by the noise and follow your strategy, without letting yourself be influenced by what people say.
Therefore, I make monthly purchases, regardless of how the market is. If it is expensive, I will buy fewer shares, and if it is cheap I will buy more. In the end, I will have a better average price than many who try to guess the movements of the stock market.
2- The Short Term does not Matter
Really, the short term doesn’t matter. If we invest in the stock market in the long term it is because it is the safest strategy, and you always have to keep in mind that in the short term you do not know what will happen.
The short-term stock market is unpredictable, so your movements should not affect you in the least. Personally I don’t look at how much my actions and my funds are, since I don’t care at all.
In the long term, of course, I will be interested in the fact that they have risen as much as possible, but at the moment the descents do not affect me at all. In fact, if the bag goes down I’m glad, since I can buy much cheaper what was previously more expensive.
3- Do Not Let Feelings Influence your Decisions
Fear and greed are the worst enemies of any investor. Now we are in a time of fear, as it seems that the stock will go down and down. But, if we look back, we see how in the long term the stock market always rises, and although there are moments of panic we have always recovered.
It is essential that you do not get carried away by the feelings when it comes to investing, that you have a mechanical strategy. Not to complicate, an Index account and automatic monthly contributions without looking at how the market is may be the best alternative.
In conclusion, that the bag goes down should not matter to you at all. If you are clear about what you do, continue with your strategy as if nothing. If a decrease of 15% in the stocks has made you go crazy and have a bad time, maybe you are not prepared to invest the current percentage in equities, and you should spend a part in fixed income to eliminate some volatility.
The best protection against these losses is preparation and training. I have it clear, I have continued shopping as if nothing, I have even slightly increased the amount of my purchase to take advantage of the moment.
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