The theme this week on the Retirement Quick Tips Podcast is: Stock Market Correction Is Here…What To Do Now

Today, I’m talking about the worst thing you can do during a stock market correction. If you listened yesterday, you may be able to easily guess the answer - and that is to sell! 

• No one sells at the top
• No one gets back in at the bottom 

Giving into the temptation to sell during periods of market declines and uncertainty is a recipe for terrible long-term returns. In fact, investors are so bad at this that professionals call it “the dumb money”.

Professional investors, market analyst will often ask - what is the dumb money doing? In other words, what is the day trader or the average individual investor doing right now? It’s actually a contrarian indicator, which means that if the dumb money is buying or selling, histroy shows you should do the opposite. 

The “smart money” on the other hand is what professionals and hedge fund managers are doing. 

Before you get mad a me and say I’m calling you dumb, I’m not! That’s not my phrase…I didn’t come up with it. 

But isn’t it interesting that it’s so common for the average investor to give in to their fear, panic, and hopelessness, that the industry has taken note and created the dumb money label for this phenomenon. 

The smart money - the professional investors - the Warren Buffett types, they’re out there bargain hunting when the stock market is down 10, 20, 30% or more. I’ll talk more about how to be like the smart money crowd tomorrow. 

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

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