There is a belief that when the Stock Market Crashes it looks like the Covid Crash of 2020.
Although those “Flash” crashes are not the normality when it comes to the Stock Market.
Normal crashes look a lot more subtle than that, as seen in the crashes above.
It usually looks like a 0.5% loss here, a 1% loss there, a 2% loss on a random day.
It looks like one day the market decides to go down by 3% and then all of a sudden the next day it goes up 2%. As Ben Carlson says,
It's SLOW DRIPS and then you look up and it's like the market is down more than 10% over the last month, as we've seen since the beginning of this year.
It drains the hope of investors.
It takes away the light that you see at the end of the tunnel.
It's investors turning from really bullish, believing in BUY THE DIP. Because they believe that this is their opportunity to make quick money.
Investors are too depressed to act because every investor has lost hope. They have gotten burned too many times by trying to Buy The Dip. Rather than the market turning around for their benefit the market instead went lower and kept dipping,
Every day you open your portfolio, you just see a SEA OF RED!
So what do we do?
What do we do when we know the market is going to be like this for an extended period of time?
What do we do when we know we are in the middle of a situation like this one?
The answer is DO NOTHING!
There is nothing within your power that you can do to be able to solve the situation.
Well, I guess I should clarify by saying it depends on who you are that would determine your reaction to the things going on.
If you're somebody who believes that the future will be better.
Then we do nothing. We stay on the path that we've set. We continue buying stocks for cheap because we believe that the current situation will not remain. It is also very beneficial for our long-term wealth building.
If you're somebody who is pessimistic about the future then you have to start making moves. You have to start hedging your portfolio to ensure you don’t lose any money. This also means you don’t get the upside of the market rebound.
If you're an older gentleman or lady, you probably need to talk to a financial advisor for them to show you what your best route is going forward.
Sidenote: when I say Financial Advisor, I mean a FIDUCIARY FINANCIAL ADVISOR. One who will put your needs before their profits. Typically these types of advisors are fee-based rather than commission-based. If an advisor is talking about life insurance as soon as you meet the person and are trying to sell you a policy immediately. That person is not an advisor that individual is a salesman. END SIDENOTE
I'm young! I don't need this money for the next 30 years. However, if you're not as young as I am, if you're not in the age group of 20s to 40s, you probably need to talk to a financial advisor. Because you can't just buy the dip all the way down. You're going to need this money relatively soon and we don't know how long it will take for the market to recover.
For those of us who are in my age group, this might be our opportunity like 2008 or 2000 to be able to buy stocks for cheap. Where the stock market is devalued for such a long period of time. It is for us to continue doing what we've been doing. Dollar-Cost Averaging as often as we can.
If you're investing within your 401k, DO NOT STOP!
if you're investing in your IRA, DO NOT STOP!
This is not the time for us to freak out. It's not time for us to panic.
It's time for us to DOUBLE DOWN on what we know will actually work.
Yes, the market is red right now.
Yes, we're in a bear market (if you look at the NASDAQ, yes I am cherry-picking).
But here's the thing, over the long-term. Over the next 10, 20, 30 years the stock market goes up.
But when you have the long-term view, it is much easier for you to deal with times like these.
Because I believe it will get worse before it gets better.
But we stay on our path and stay consistent with it and let things work out for our benefit.
Remember GENEROSITY > greed
God bless Each and Everyone of y’all
✌🏾