http://www.businessinsider.com/most-important-chart-during-stock-crash-2016-1 An opinion piece on the lessons of an S&P 500 graph in a crashing market. Interesting read, food for thought.
They always say, take advantage of the stock market's emotional investors. I currently have a broker dealing with my retirement account, but just shy of a money ago, decided to open up a brokerage account to play in the market myself. The managed account was opened just at the peak before the 2008 recession. After the recession and after this last fall, I am still ahead, because my broker knows better than to panic. OTOH, this little sandbox account I made, I decided to finally jump in and two days later, oil plunged and we are in the middle of a correction. As of Friday, I am almost back to where I started because I didn't let my emotions get in the way of my decision making. When the drop first happened, I admit, I panicked. I told my wife, why the hell couldn't I have tossed that money in just as the market took a dive? I think this has taught me more of a lesson than it would have had I waited a few days. It forced me to do more intense research and learn from it.
It's an interesting approach in principle. Everyone kind of knows about buying when people are fearful etc. But whether we've got the discipline to follow through when panic hits is another matter. Those with the right risk tolerance perhaps. I guess if you can abdicate the responsibility for acting to someone else then you won't get sucked into the emotions of the situation.
I like how the author pointed out at the end of the article that investing in long term is still the best strategy in investing in stocks and handling crashes. It's really hard to depend on emotions specially when we are experiencing downfall in stocks that's why it's very important to think long term and eventually the market will rise again.
If you invest in companies that do the fundamentals well you're going to be ahead over the long term, which is what really matters. If, however, you put your money into whatever stock is covered all day in the media, like Tesla, you're going to be in for a very exciting ride.
Yep, that is probably my basis of investing.. I buy good companies who get crushed during a correction despite the fact that many of the reasons for the correction do not apply to the company I am interested in. You can get a lot of value today in companies that are not linked to China. The biggest reason for the downturn this month is China, but that is affecting companies not even related to China.
Everything depends on when you need to take take the money out. If you need it when the markets are up, you win. If down, you loose.
