It's been said many times before but, given how few people pay attention, it's worth repeating every time that the market takes a nosedive. History has demonstrated amply that investors who try to jump in and out of the market to avoid big declines find themselves achieving horrendously bad results than those who simply buy and hold.
I know -- with the Dow looking like it could open down 500+ points tomorrow, it can be scary. And maybe you'll be able to save yourself more anguish by dumping everything. But maybe not. It's impossible to know and the track record of investors who make that bet during market meltdowns is not good at all.
Bottom line: If you're in a panic over the market's gyrations today, do not trade! Take a walk. Play with your kids. Read. Go to the gym. Whatever! But making investment decisions in a state of emotional instability is never a good idea.
If the market's volatility is messing with your mind, I would strongly urge you to pick up a copy Your Money & Your Brain for some strategies on how to manage your emotions. So go pick up a copy, turn off your computer, shut off CNBC, stuff the Wall Street Journal in the trash, and chill out.
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Reader Comments (Page 1 of 1)
1-21-2008 @ 6:12PM
tim said...
It's also worth repeating how naively optimistic people are. You think you can't time the market? Wrong. Anybody who follows the charts saw this coming a mile away. Anybody who knows how dangerous the combination of greed, leverage and opaque investments are saw this coming a mile away. (see my Jan 4th article that's already proven to be 100% correct):
http://www.bloggingstocks.com/2008/01/04/why-i-think-the-market-drops-10-in-2008/
You think you can't profit from market declines? wrong, learn short selling, it's great! I'm loving this crash, as a short-term short-bias guy, I've had to take crap from mainstream value/buy and hold investors for years. "Oh your strategy is too risky...it takes up too much time...stocks tend to go up in the long run..."
Well, now, it's time you get schooled in why you should never trust Wall Street, you must learn technical analysis and if you ignore those two , you will be forced to endure some serious pain. You spoiled spoiled longs, you must atone for your sins. Thank you bear market, you've promoted my beliefs far better than I ever could!
Tim
http://www.timothysykes.com
Tim
http://www.timothysykes.com