Don’t Balk on Down Days
Finally, I’d like to remind you that no matter what we do as investors, the market often has a mind of its own. Every day is not going to be a good day. No one can win all the time. However, it’s important to take the bad days in stride, just as you do the good.
Many times, investors see their stocks drop a few percentages and go into defense mode. The same is true when the overall market falls. The natural tendency is to pull up stakes and hit the road. But hasty decisions often are an investor’s downfall. The stock market is a living, breathing entity, constantly changing. At any given second, a stock can be down, then shoot back up two seconds later.
Fluctuations in stocks and the stock market are to be expected. Considering all the external factors that affect market activity and the thousands of moving pieces that comprise it, it would be impossible for the market to only go up — and bad for business.
With that in mind, I want to caution you not to overreact on down days. Sometimes there is cause to be concerned, but you’ll be able to tell when a decline is substantial enough to worry about. More often than not, declines in a stock or the overall market are fleeting and won’t have a lasting negative effect on your holdings.
Remember: Keep your cool when it comes to investing.