Keeping Your Cool When the Stock Market Heads South

As the Coronavirus wreaks havoc on the stock markets and share prices of the world’s biggest companies, it is worth taking a breath and remembering ‘this too shall pass.’ Anyone who has invested in the stock market successfully over the years will tell you that long term investing is about being able to ride out the dips (or crashes) and keep your cool when everyone else is losing theirs. Now that might seem difficult to do if you are watching years of investments plummet in value – but keeping cool is the only way to ride out the storm and keep your investments on track as it allows you to make calm and rational long term decisions, rather than thinking only about the short term losses. How do you do this? By bearing in mind the following points:

 

Every Downturn is an Opportunity.

If you keep in mind the long-term success of the stock market and understand that there will occasionally be corrections and downturns, then you can calmly and rationally choose to view any crash as an opportunity rather than a loss. Don’t think about the drop in value of your portfolio, rather see it as a chance to buy at cheap prices and expand your portfolio as part of your longer term investment plans.

 

Stay Away from The Computer

If you’re having problems keeping cool about your long-term strategy, the simplest thing you can do is to only let yourself check your portfolio once every couple of days. Whether you have decided to buy more or are simply holding on to what you have got and choosing to ride out the crash, there is no point in checking on your stock prices every other minute in the middle of a crash. Doing so will only stress you out and might cause you to act irrationally and do something you will regret later – like sell when prices are rock bottom. One way to counter this urge is to simply step away from the computer, turn off your phone and go and potter in the garden, go out to the pub or cinema, head to the gym to work out etc

 

Keep Chanting ‘In It For the Long Term.’

The thing to do is just keep quietly reminding yourself that what goes down will always go up again and every time you waver, remind yourself of your long-term plans. Coronavirus is causing absolute carnage on the markets at the moment, but it too will eventually pass. If you have the chance, see it as a buying opportunity, but at the very least, hold on to what you already have and – don’t panic!

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