Yes. Because investments go up as well as down --- and that’s no cause for panic.
2017 was quite a year for U.S. investors, with new record highs and solid gains across the board. So to speak, the stock market just kept running and defying gravity. And if you’re like me, you’re an investor who’s feeling bullish about the market today – and you have good reason to be.
That said, you don’t have to ask too many people what they think and you know what comes next – doomsday choruses from media houses, CEOs, market pundits, and nearly everyone else in the money world who feels the need to remind investors of the significant incoming losses from corrections in the market. Corrections that even the ‘experts’ claim could be sustained and not merely a short-term pullback. But how accurate are these predictions and how ready should you be to dump it all when first blood is drawn?
But first, some perspective:
|Wall Street has correctly predicted nine out of the last five recessions.
• Paul Samuelson, 1966
Got that?
To be fair, some of the people who make it their duty to predict market crashes every other month could simply be borrowing their ingenuity from Foxy Loxy in the classic “Chicken Little” fable. This line of thinking explains itself when you look closer at how they stand to benefit from inciting mass hysteria. You know, because panic ultimately leads to major sell-offs and even lower prices, allowing a few to conversely buy it all up.
Surely, you’d think our collective and individual intellectual prowess must be above whatever brain power Ducky Lucky has. Enough at least, to ensure we’ve all deduced that bull markets aren’t bubbles waiting to burst and that this whole “ The Sky is Falling” rhetoric is actually counting on the fact that you react in a certain way.
But there are many reasons why you shouldn’t. For starters, there’s the fact that it’s only a loss when you sell in a dip and lock in those lower prices out of fear that the world is ending when you see the color RED across your portfolio.
Stocks most likely will take a downturn, because it’s healthy for the investment market and it tends to happen now and again. The sky however, will never fall but simply cry. Something I like to think of as rain. At which time, you’d be wise to keep calm, hold on to your umbrella to protect your harvest and wait it out rather than sell your barn. How, you ask?
Here’s 3 things to do to prepare for a stock market correction or crash:
TUNE OUT THE NOISE MORE OFTEN THAN NOT
A lot of the news streams that predict doom are counting on people like you and me to act on our emotions. They’re selling dramatic stories to try and convince you to do something that you otherwise wouldn’t rationally do. Take your time to assess the markets on your own. Never channel the fears of talking heads and big-name investors.
KNOW AND REVIEW YOUR ‘WHY’
I can’t stress this enough. It is so important to not just be a trend follower, but instead to know and rely on your money goals prior to making any investment. Identifying your objectives will help you focus on what is important. When markets go south, as an individual investor there’s little you can do to change or affect any of these trends. Be wise to not panic but keep doing as you have and make informed decisions that are in line with your financial plan.
REMEMBER THAT CLEVER MONEY ‘HODLS’ (some bitcoin slang for you)
Clever money makes most of its wealth-amassing decisions when the market is in a dip. [Stop reading, and re-read that last sentence. It’s one of the big secrets to building wealth.]
If you’re an investor that considers a short-term market correction of around -10% to -15% to be signal of falling skies, then are you really an investor? No, you’re not. Do your own research before you invest and don’t rely on stock tips or supposedly expert advice. No one has all the answers regarding market interactions but if you become an expert in your own areas of investment, then you won’t be easily derailed.
As they say, slow and steady wins the race [I could share another fable on that one, but one a day is enough.]. So, stay the course and HODL trusting that there are seasons to every market. Downturns come and go and prune out the unworthy. Invest in companies and projects you believe in, and let your investments play out.
Major Kong Rides the Bomb
