When times are down
If you invest in the stock market, you’ll eventually experience emotions of euphoria, greed, fear, uncertainty, and self-loathing. Invest long enough, you will lose money in the stock market. It is an inevitability. Either the single stock you bought will have a bad quarter or the fresh money you invested into an index ETF will inexplicably start to sell off soon after.
Here are a few tips that can help you feel better.
Tackle something really difficult and succeed, losing money in the stock market will feel less painful in comparison. A distraction from constantly checking the market for hours on end to relax your brain and muscles from being on edge.
Having more than 50% of your net worth in one asset class that is tanking, you will likely feel a lot of pain and fear. As a result, by the time you reach a minimum level of financial independence, I recommend keeping any risk asset to less than 50% of your net worth. Most people who get wealthier over time get more risk-averse. They become more satisfied with what they have. Therefore, they’re willing to accept lower returns for lower risk. As a result, wealthier people tend to diversify their net worth across many investments. Often, the biggest challenge to developing a diversified net worth is overcoming greed. Investing FOMO can be extremely hard to overcome. If you are more satisfied with what you have, it’s easier to give up potentially higher returns by diversifying.
Your goal is to invest when times are good and bad. Over the long-term, the S&P 500 has performed very well. The problem some investors have is not being able to hold on during downturns. If you can keep on investing during downturns, chances are extremely high, 10 years from now, you’ll make money.
The global financial crisis resulted in about a 38% correction in the S&P 500 in 2008. The March 2020 meltdown was a 32% correction from peak to trough. Therefore, to make yourself feel better, take a 35% haircut off the value of your stocks. This way, your realistic downside expectations are set. Give yourself low expectations to trick your mind.
At the end of the day, the reason why you invest is to live a better life and take care of future generations. Don’t forget to enjoy your stock market gains on occasion. Otherwise, all your hard work and risk-taking will be for nothing.
Here are a few tips that can help you feel better.
Tackle something really difficult and succeed, losing money in the stock market will feel less painful in comparison. A distraction from constantly checking the market for hours on end to relax your brain and muscles from being on edge.
Having more than 50% of your net worth in one asset class that is tanking, you will likely feel a lot of pain and fear. As a result, by the time you reach a minimum level of financial independence, I recommend keeping any risk asset to less than 50% of your net worth. Most people who get wealthier over time get more risk-averse. They become more satisfied with what they have. Therefore, they’re willing to accept lower returns for lower risk. As a result, wealthier people tend to diversify their net worth across many investments. Often, the biggest challenge to developing a diversified net worth is overcoming greed. Investing FOMO can be extremely hard to overcome. If you are more satisfied with what you have, it’s easier to give up potentially higher returns by diversifying.
Your goal is to invest when times are good and bad. Over the long-term, the S&P 500 has performed very well. The problem some investors have is not being able to hold on during downturns. If you can keep on investing during downturns, chances are extremely high, 10 years from now, you’ll make money.
The global financial crisis resulted in about a 38% correction in the S&P 500 in 2008. The March 2020 meltdown was a 32% correction from peak to trough. Therefore, to make yourself feel better, take a 35% haircut off the value of your stocks. This way, your realistic downside expectations are set. Give yourself low expectations to trick your mind.
At the end of the day, the reason why you invest is to live a better life and take care of future generations. Don’t forget to enjoy your stock market gains on occasion. Otherwise, all your hard work and risk-taking will be for nothing.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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astabrin : hey @Mcsnacks H Tupack, great advice. For some reason , i felt either my luck is out or there is some conspiracy theory, the moment i sold my stock ( in thousands) , the price of the stock went up. like $Coursera (COUR.US)$ , i had kept for 9 months yet it has been dropping like no other people's biz , i decide not to take further risk and sold at 18.5 ( with close to 40k usd loss) , the stock price fly to the sky yesterday out of the blue where there r more sellers than buys and also further huge volume of insider selling. Damn . my heart cant no longer take.
Tiktalk : thanks...sir
Mcsnacks H Tupack OP astabrin : Yea the market hit a bounce so most stocks will recover and go higher than before.
Mcsnacks H Tupack OP astabrin : Stocks are still at discounted prices.
Mcsnacks H Tupack OP astabrin : I’ve been taking losses with $Valneva (VALN.US)$ but I keep averaging down when I can since I know approval is on the horizon.
astabrin Mcsnacks H Tupack OP : i dont think so for $Coursera (COUR.US)$ . i recall you had given insights 6 months ago on this stock. ishd have listened back then - huge insider trading . minmize my lost of 40k usd for trash stock.
Mcsnacks H Tupack OP astabrin : Yea that’s what hurt them last week. Insiders exercised free stock options which diluted the stock. They did have a news announcement yesterday so that should start it recovering. But I’m not a fan of the stock. I’m trying to get a few shares of $SmileDirectClub (SDC.US)$ at 2.10 or less since it signaled reversal
Mcsnacks H Tupack OP Mcsnacks H Tupack OP : Just waiting on the MM’s Book to fill so I know it’s heading up.
astabrin Mcsnacks H Tupack OP : i wrote in and complained to cousera so many times. with 6.2 million insider trading selling ... how will it reach pre IPO price of 50usd . you r a genius .... i shd throw in white towel the time you shared insights and i would have benefitted. what a painful and expensive lesson to stay with coursera .... millions of insider trading every month... gosh...
Mcsnacks H Tupack OP astabrin : These companies consider it a win if the price falls after IPO because that means they were overpaid for the shares. If it increases after IPO is when they get mad because they feel like they were cheated. So they will do a prospectus or give share option for insiders so they can get that money from investors they feel they lost. Greed.
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