- Stocks are crashing
The current stock market has much in common with the decrease of 2008. Much can be learned from the crashes that we have been through and can be taken into consideration before we take actions in the current market.
Market corrections happen about every one and a half year. When the market has been increasing for a while it’s normal for the market to decrease and stabilise afterwards. These corrections frequently derive of a 5 – 10% downward trend. However some events happen that influence the market even more and cause a 20% fall.
Managing and navigating through a financial crisis is no fun at all. – Howard Schultz
During a (semi-)crash it is important to realise that crashes can happen at any point. Not having sold your stocks before or during the crash doesn’t mean you are doing something wrong. After most of the crashes the biggest recoveries happen. Selling out at a certain loss may prevent you from recovering quickly. Remember: the only loss you suffer is at the moment you sell your shares.
A decrease doesn’t have to be bad at all. If you remember your long term plan you know that you don’t need to worry yet. You will even start to realise that all the great stocks you always wanted to buy are slowly getting better priced. You will be capable of purchasing great companies on a discount. The big thing is if you can stomach the look and the feeling of losing money. The biggest part in this is your mindset. Our next article will deal with this part of the changing market.