What to do when the stock market tanks

Predictably unpredictable, nobody knows what the stock market is going to do everyday of every week all year long.  Nobody.

The one thing we can count on is that the market will go up and the market will go down.  It’s a lot of fun to see “green on the screen” when you check your balances. Red is just depressing.   When you are a net buyer of stocks that means you may want to consider if you have cash on the sidelines you can put to good use.  When the market is in correction territory, or has a big down day, it can be a good reminder to reassess your stock allocations and have a good gut check on whether you still agree with your risk level.  If you haven’t re-balanced in a while it may be a good time to do that. If you have made contributions to your accounts but haven’t put those funds into stock positions it could be a good time to do that.  I’m a strong believer in knowing what is going on in the macro-economic side of things. Do your homework and know what you own. Don’t freak out and sell, that could be the worst thing to do. We should buy low and sell high.  Most investors buy high and sell low. You make money on the buy side, just like any asset. Studies have shown the people that make the most money are the ones that buy stocks earliest and move in and out of stocks the least. Keep a long term mindset for your stock investments.  If you have a short term mindset then stocks may not be the best investment choice for you (or you’re a gambler).

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