So that Black Monday happened.
There's something about seeing those deep red numbers across the board that triggers our fight-or-flight response, isn't there? That sinking feeling in your stomach as you watch your portfolio value dropping... I know it all too well.
In my situation, I am trying to look at it positively. Afterall, it is too late for me to sell anything. Better to keep calm and learn from it.
There are some patterns in how investors react in such times, and we may be wasting the golden opportunities these crashes present when it happens. Market crashes aren't just moments of pain. They're also windows of opportunity, if we can manage to see through the chaos.
The first mistake is panic selling during a crash
When markets take a nosedive, panic selling becomes the order of the day.
But here's what I've realized: by the time a market crash is in full swing, the collective panic and selling behavior have already reflected the negative news in stock prices. Selling at this point? It's usually meaningless. Of course, your situation might be different. I am not selling because I can still put food on my table.
The real skill isn't in how quickly you can hit that sell button during a crash—it's in having the foresight to reduce positions before the storm hits. Sadly, I do not. So I just focus on staying calm now. The market will get back up, it just need time.
Mistake number two is hesitating to buy or having no dry powder to fire.
Those of us who've been smart (or lucky) enough to hold cash or liquidate positions earlier often face a different challenge. We consider buying during bull markets, but when actual buying opportunities arise during crashes, we freeze. Usually we're harboring the unrealistic expectation that we can somehow predict the market's next move and want to buy lower. My approach is to slowly DCA in and not worry about short-term price declines because they aren't true risks when you're investing in fundamentally sound projects.
Of course, this isn't financial advice. Don't be foolish in buying aggressively during downturns, it's not just about being brave. It's about being selective too. So knowing what to buy is key. And that, I cannot help you.
Every major market decline presents an opportunity to sow the seeds of wealth. I hope everyone can find their own opportunities in the current market environment.
Remember, we're all on this financial journey together. Press on.
