The theme this week on the Retirement Quick Tips Podcast is the Deadly Sins of Investors In Bear Markets.

Today, I’m talking about a common temptation when the stock and bond markets go haywire, and that is forgetting the basics of successful investing. 

Many investors get so caught up in fretting about their portfolio losses, that they forget about and abandon the timeless basics of successful investing.

Investors forget about asset allocation, diversification, risk, asset location, company valuation and fundamentals. 

But it’s paying attention to these basics in good times and bad that will help see you through. So if you pay attention to asset allocation, that will help you to rebalance your investments and buy when stocks are cheaper. If you respect the principles of diversification and risk, you’ll avoid putting all of your eggs in one basket by owning a single stock or doubling down on an investment thats already reeling with significant losses in the hopes that it will bounce back. 

By paying attention to asset location, you’ll ensure that taxes won’t bite you hard later and that you own the right investments for each account type. If municipal bonds look cheap, they’re never cheap enough to own in an IRA or a 401k type account. 

And lastly, by paying attention to company valuation, you’ll avoid the temptation of buying a stock simply because it’s dropped in price. Many investors make the mistake of buying a stock after it drops 20, 30, or 40%. 

The stock of the popular social media platform, Snapchat, is down almost 80% this year. The company relies on ad revenue to make money, and with that down and projected to get worse, the company has been in the doghouse. On the surface, it might look to some like the stock is now cheap after dropping 80% this year. 

But to me, it doesn’t look like the stock is cheap at all. They aren’t profitable, they have plenty of competition from other social platforms like TikTok and Instagram, and their future still looks very uncertain. 

So don’t ignore the basic tenets of successful investing during a bear market, and you’ll be glad that you didn’t make a snap decision (did you catch that reference there?).

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance