Rona, unemployment, and fed pumping trillions into the market with their printers BRRRRRR Should your strategy change overall when markets are doing this? The market just an amazing bull run but the last two days have been a downward spiral and it looks like we’re about to drop even more. What should you do with your stocks? Since Feb, Markets have been volatile. In Mar, markets drop so much that it triggered circuit breaks in the market Circuit brakes are market volatility regulations which were put in place in 1987 when the market dropped 22.6% in a single day. That was known as the Black Monday. A second incident happned in 2010 when Dow jones went down over 9% in 10 minutes. And then subsequently recovered before the market close. A lot of lessons were learned about machine trading on that day.
Now the question is…is the market going up from here or is it going down? Should you do anything differently for you stocks when the market is going down like this? It depends on the type of investor you are. If you’re a trader with lots of leverage, I would not be holding margin positions as the market is dropping unless you’re shorting the market. But this talk is for long term investors so, good luck buddy; I suggest r/wallstreetbets to find others of your kind (I lurk there, yes...yes, I do...I'm not ashamed to admit it)...but check out r/bogleheads when you're ready Obiwan. One thing is for certain, generally speaking don’t sell into a market crash because you’re likely to panic and then try to buy back in at wrong prices. Psychology of Traders: When market drops, it create a panic which causes selling to occur - eventually there is a price where people buy…people think that it can’t go below here…and people buy in and they really load up…now then markets can drop even further…this is where the market had taken a breather and now it’s resuming it’s sell off. During this time, you shouldn’t load up, rather you should buy a little bit at a time..because the idea here is to buy around the bottom, not at the bottom. Your fav stocks are about to go on a sale again. Hold cash and wait for drops to buy into stocks that you already love…Add to your index positions. These market drops are the time when you should really load up and buy more shares. As market drops lower, an investor seeks to buy more of the quality assets they already own, in my case that’s SP500 index as a the majority holding (85% currently). Buying like this allows you to take advantage of market fear and buy your fav stock or index at really good prices. So, don’t panic and hold cash - look for opportunities to buy some more. Have a longer term outlook that is at minimum 5-10 years out - if not more (if not, my fave "FOREVER" outlook - where you hold forever and live off your stocks when you're ready - and I'm trying to get there wayyyyy before retirement). You’ll do just fine. If you’re at retirement age, you shouldn’t be playing in the stock market too much…but you already know that. Any 50+ years olds should have a well diversified BONDS, STOCKS, and REAL ESTATE portfolio to ride through the market craziness...actually, I have more videos coming SPECIFICALLY for people that are trying to retire well and not just GUN IT and make couple of multi millions like I'm trying to do. More on that later. Good luck
