Index Of The Blog
There are several ways to take advantage of a market correction. Most investors tend to panic when they see a significant decline in their portfolio value. Well it happens to all of us. The great impact comes on how to deal with it. Panic selling your stocks is never a good idea, and it can be very detrimental to your investment goals. If you sell at the first price fluctuation, then it shows that there were no reasons for you to own that stock.
With that in mind we should always try to focus on our strategy, and our investment goals. Do not be influenced by short-term price fluctuations, that may not impact your long-term investment goals. Unless anything material has changed, you should keep your portfolio intact. Remember that there are ways to deal with portfolio underperformance.
Control the urge to sell
When everything is going down at the same time, it becomes unbearable to watch your investments collapse in value. This is the perfect time to step away from the computer and rethink your strategy. Remember what your investment goals are, and what you are doing in order to achieve them. You will most likely find out that what is happening is not directly affecting some of your stocks.
Should you sell?
Well without knowing your portfolio it becomes difficult to assess whether you should sell your stocks or not. If the event that has triggered the markets for a correction has a material impact on one or more of your stocks, you should consider selling. This does not mean to sell right away. It means that you should ponder how this new piece of information will in fact affect those companies. If the impact is too much, then it might be a good option to sell since the fundamentals have changed. If the fundamentals have not changed, just remember that corrections are normal.
Should you buy stocks during a correction?
Well this is perhaps one of the best times to buy stocks. Corrections are like black friday for investors, and you should take advantage of that in any way you can. You will find a lot of mispriced securities that might turn out to be incredible investments at those prices. Focus on companies you have previously analyzed, and make sure you buy them if they are cheap enough. Investing in corrections can generate incredible generational wealth beyond your wildest dreams.
