How to Handle the Current Stock Market Plunge
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Crises are part and parcel of life. We have them in our personal lives, the government has them, companies have them, and financial markets are famous for them.
Remember the 2008 sub prime mortgage and housing crisis? What about the 2000 dot com bubble? Remember the recent tsunami in Japan and its impact on world financial markets? What about the horrible 911 tragedy and ensuing market collapses?
These few examples are reminders that life is unpredictable.
Print these tips out and look at them when you start to freak out!
TIPS TO MAINTAIN CALM DURING THE CURRENT MARKET DECLINE
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Do not be surprised by market drops, they are periodic and unavoidable.
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Do not panic.
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Continue with your prior investing program. Remain patient.
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Keep contributing to your workplace retirement account.
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Turn off the television investment news.
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Check your investment statements quarterly or less.
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Make sure any money you need withing the next 5+ years is not invested in the stock market.
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If you cannot handle much market volatility, do not put much money in the stock markets as they are volatile.
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Understand that the long term trends of world and USA markets are up.
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Continue investing during market downturns, that’s when the real money is made.
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Don’t jump in and out of the market, you have to be right twice, and that’s unlikely. Research shows that frequent trading leads to under performance.
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Realize that every successful long term investor has been through many market delines. Don’t be scared by market ups and downs.
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Remember, this too will pass.
What are your tips for handling the stock market ups and downs?
image credit; Brendan Loy
“Don’t jump in and out of the market, you have to be right twice, and that’s unlikely.” That’s a sobering thought!
Great points, Barb. We are not freaking out, and we have stopped watching the financial channels on tv. We’re so much calmer that way!
Very good advice about not putting money in the market that you will need within the next 5 years.
Maggie recently posted..Grilled Salt & Vinegar Potatoes
Trick is to wait it out a few days, but stay alert.
Tushar Mathur recently posted..Role of Your Spouse in Personal Finance and Money Management
Excellent article Barb. You can’t jump off a roller coaster in the middle of the ride…
Matt Wegner @ Financial Excellence Blog recently posted..Yakezie Update: We Broke the 200,000 Mark!
You article is a little sanity in this insane world! I am still thinking long term, I plan on living 30+ more years.
krantcents recently posted..Old Guys Win!
This is where good diversification is good. While stocks are down, bonds are stable and gold is way up. Later, stocks will recover, gold will drop and bonds will improve.
By holding independent assets in a fixed portfolio and occasional reallocating to that fix allocation, you can buy low and sell high while reducing the volatility.
Brave New Life recently posted..Investing In Stocks When Fear Is High
Another great article Barb. Something else people need to consider is using this time for a few purposes:
- Look into investing in inverse funds (money can be made without increased risk, but just by following the momentum of the markets)
- Start developing a watch list of stocks for when the momentum does turn around
- Review… journal… rethink… it is a good time to evaluate the past and plan for the future so you can be even more successful.
Well, there’s plenty more… but I trust this contributes to the community here.
Doctor Stock recently posted..Predicting Which Way the Markets Are Headed – An Introduction
Great tips Barb! The news hardly shows anything positive.
Funancials dot biz recently posted..Beware of the Bundle
I love #2 Do Not Panic. Its the exact advice the Hitch Hiker’s Guide gives, and I think it is, in general, some of the best advice out there about anything.
shanendoah@Baking the Budget recently posted..7 Links Project
“Don’t jump in and out of the market, you have to be right twice, and that’s unlikely.” Great point.
Have to say, I talked to someone over the weekend at a kids birthday party, about the credit downgrade. His take was that on Monday it would be “armageddon”, Tuesday would go back up, then Wednesday it would fall sigificantly again. He was right! Or, lucky:)
Squirrelers recently posted..Revisiting The Rule of 72
As always, very prudent tips Barb! One thing I’ve learn’t from past dips is not to panic. When it comes to investing, your emotions are your worst enemy, not the market!
MoneyCone recently posted..Market Meltdown, What Should You Do?
@Maggie, the financial channels are so short term oriented, that you must take them with a grain of salt.
@Tushar-We might have to wait more than a few days for some calm.
@Matt-Love, love, love the analogy. I’m going to steal this one!
Steal away Barb! Actually I think I stole it from someone else but can’t remember if I stole it or tweaked it…
Matt Wegner @ Financial Excellence Blog recently posted..Verse of the week: A good name is…
How many times have you had to repeat that mantra in the past 2 weeks! UGH
Evan recently posted..How Have I Increased My Net Worth 50% This Year
Thanks for the reminders Barb.
Marie at FamilyMoneyValues recently posted..On Staying Relevant at Any Age
Great reminder, Barb. We’re acting as if nothing has happened…with the yo yo action of the market over the last week or so, it’s best just to leave things sit where they are and just ride it out.
Do not panic and slowly change our investment to gold while wait the market in its sense again.
Dana recently posted..Knowing Stocks/Shares Risks
Thank you all for chiming in. This is the key time to take a deep breath and stay the course. I can’t tell you how many folks I’ve seen run away when stocks plunge only to miss the upside!!!!
Great post, Barb. Thanks for reminding us not to succumb to flight/fight instincts. I believe we will enter a huge bull market eventually, maybe in 10 years, but in the mean time low prices can be looked upon as a good time to get in cheap!
Invest It Wisely recently posted..My Top 7 Posts
Great article! Very informative! So is it a safer bet to also go with gold and silver nowadays? I feel right now that it is overvalued. What do you think?
kerwin recently posted..Traversing Shield Career? Absolutely No way! Consider Internet Surveys At Your Home And Get Money
@Invest-Great reminder to buy low and sell high.
@Kerwin-Gold – Silver ??? Do not buy at the top of the market. Do not follow the crowd. Develop a sensible asset allocation, contribute money regularly , and don’t panic with the ups and downs of the market. Time in the market is the true ticket to wealth.