You wake up, go through your morning routine and if you do have them, you check your stocks. Then bam! The Dow Jones has already dropped 150 points and it's only 11AM. After seeing this, you check your stocks to see if they've fallen to. And damn it, they did. Some of your stocks are down big, 5, even 10%. Soon, you are surrounded by red price changes, then panic sets in.
"Omg, should i sell right now? What if the market goes lower? Maybe I should get out and go back in when the market is hits a bottom. What do I do?"
This maybe a common feeling when people see the market or their stocks drop in price. This is a emotion everyone feels when they first start. It's natural and even fair. However to be successful in picking common stocks, you need to train your emotions to react differently to such price changes.
Let me introduce you to Warren Buffett. Now, the 4th richest man in the world (previously 2nd), Buffett ignores the ticker symbols. He doesn't panic if the market sold off heavily, instead, he wishes for more of those opportunities. In fact, it says he wishes to see a few depressions before he dies. Start training yourself to be excited with market sell offs. Why would someone want that?
Because when markets sell off, even great companies go down too selling at cheaper prices. Sometimes technology will lead a big sell of and an industry totally unrelated will get sold off also because of the pressures. These are the opportunities we should be looking for.
A good idea is to build a shopping list of stocks you would like to buy if the price is right and if the market sells off big, start loading up. That's how we can make money.
When there is a big sell off, i study the market and see what is causing it. Usually, I spend more time on these days sifting through my watchlist and seeing if there is anything I can buy. I haven't mastered my emotions yet, but they are definitely reacting better to price changes.
"When people are fearful, be greedy. When people are greedy, be fearful."
quote by Warren Buffett
Next post: Characteristics of great companies..in my opinion.
- James Ung
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Im a believer in JDUinvestments. I think I have ownership in that name?? haha jm. Nice blogs. Looking forward to more posts. We should still get together occasionally to talk and smash. I just bought a lot of GEX, hopefully its a good move. Maybe ill write about it in the near future. Anyways, keep the passion alive, its going to lead to big things.
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