FLASHBACK FRIDAY: TIPS FOR WRESTLING WITH MARKET CORRECTION
No one wants to see their investments decline. Who does? However, losses are inevitable. This is part of investing. We learn from our mistakes or shortcomings to achieve success, right? In today’s Flashback Friday, we will recall some tips which are applicable in times of market correction.
Checking your trading account from time to time is a major no-no. What is the sense of logging into your account many times a day if we cannot avert market declines at all? Signing in once is good, twice is enough, but thrice is too much. This not-so-good habit cannot aid traders make sound decisions and curb losses. Rather, it heightens emotions and increases stress levels.
Forget about media hullabaloo. Trailing latest financial news is helpful. But keeping up with the media hype won’t benefit you and your portfolio. Sure, lots of analysts and investors will pitch their insight about markets, specifically market correction. Numerous news items will sprout every now and then. Economic data will emerge to and fro. But making an investment decision lies in your hands at the end of the day. If you are in this situation, do not join the bandwagon and take a deep breath.
Here are some other pointers for dealing with market correction:
- Maintain a proper perspective at all times. Being optimistic about investing is the first key to reaching your financial goals. Correction will always prevail regardless of current market condition. No expert can gauge the extent of this correction. Overreacting takes you nowhere.
- Concentrate on minimizing losses. Use this time to assess your portfolio holdings and its corresponding risks. It also pays to evaluate your trading plan and find out if you need to stick or change your plan based on certain factors.
- Look at the greater picture. Ask yourself this question: when was the last time you evaluated your financial plans? If you cannot remember when, revisit your goals and check if you are on course to attaining those objectives. This will give you a better perspective, enabling you to adjust your portfolio, if needed.