I've also been hearing from financial seminars and trusted financial advisors that when stocks fall, especially the big ones, it is the best time to buy because eventually they will soon recover. I'm trying to implement the saying, "there's nowhere to go but up" in this kind of scenario. I think it's just a matter of choosing well which stocks to buy. Research and investigate thoroughly on a company first before buying - this is my philosophy right now.
I just found this additional article regarding the plunging of stocks because of the fall on China's market. It turns out that China hasn't been able to recover yet from the down fall last year. The owner of an investment firm, Ted Parrish is actually advising investors that this is the perfect time to buy stocks and if you already own some, this is definitely not the time to sell especially if you're investing on a long term basis. Read more on the story below: http://money.cnn.com/2016/01/15/investing/stocks-fear-bonds-gold-china-oil/index.html?iid=SF_LN
I'd be more of a buyer than a seller in this environment. I prefer to think long term rather than sway with daily moods. That said, to be honest I'd rather sit on the sidelines this exact moment in time. Let's get some of the reporting season noise out of the way first and hope that the market settles down a little.
Although I tend to buy/buy more in small amounts of a fair number of stocks when the markets sell off, I also do tend to take at least a little profits on more volatile holdings (that will likely drop dramatically if the markets continue to tank), and I also tend to add at least a little to more bearish positions (puts, covered calls, shorts, short index, gold, cash, etc). But I've been doing this a long time, do it professionally, and have a pretty good chunk of change to play with. If you're a small novice investor putting $100 a week into your IRA, you're buying more shares when the markets sell off, less when the markets are higher - so you're helping yourself over the long haul by buying more in rough markets. You might want to keep a few bucks of that $100 in cash each week, and not be afraid to take at least a little profits here and there when an individual investment (or all of them) has had a really good run up and isn't so cheap anymore.
It would make sense to invest in the larger companies now that the price is lower. The statement that 1 trillion has been erased from the stock market is somewhat elusive, though. If it was taken out of the market, it will find its way back in the market again through alternative investment platforms and other areas that entice with a higher profitability margin. A lot of people are going to short sell thier stocks with the current stability of the market in question, and the ones who are able to see where that's going are going to make money on it. If that's not your cup of tea and you prefer to go only for a more traditional approach, then you might want to buckle up, go with JR's advice just before this post, and hang on until it starts to come back up again. One of the hardest things to do is to hold on to a stock after it has dropped, because the natural desire to sell it is always at the forefront of your choices. If it falls too much, you may want to or need to. That isn't always the most efficient strategy, especially if it's only a temporary fall. If you're worried about security, you can't go wrong with investing in rare earth metals like gold, silver, or copper. Those are always going to be there for you even when you have uncertainty about any particular market direction. A friend mentioned that penny stocks might be a good idea too, since they are falling along with the larger ones. This means you'll be able to buy more of those than usual, and if the market comes up on the ones you invest in, you'll have more of a distributed return on each of them when it does as long as the bottom doesn't fall out for some reason unexpectedly. Like with any stock, you'll want to research the company and all the conditions behind it whether you're doing a long-term investment or daytrading approach.
Penny stocks are going to be far less likely on average to survive when things get ugly. They're almost always trading for pennies for very good reasons. What the OP is referring to is a drop in market and securities valuations - not outflows of investor money. Outflows are nowhere near the trillions that market devaluations can be in tough times.
