Worrying Too Much About Stock Market Fluctuation
I know we worry about myriad of issues concerning stocks market because it affects our portfolio value day in day out. Our heartbeat increase when we look at the news headlines about “ trade war “ , “Interest rate increase “ , “ EM slow down” , “US Mid-term election” , “Sanction on Iran “ etc..
But should we press our panic button to “ buy or sell” every time we saw these news headlines which cause the market to fluctuate up and down ?
Read this before you make a hasty act on trading your stocks base on “ News Headlines “.
Buy American. I Am. By WARREN E. BUFFETTOCT. 16, 2008
“A little history here: During the
the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept
deteriorating until Depression took office in March 1933. By that time, the market
had already advanced 30 percent. Or think back to the early days of World War
II, when things were going badly for the United States in Franklin
D. Roosevelt and
the Pacific. The market hit bottom in April 1942, well before Allied fortunes
turned. Again, in the early 1980s, the time to buy stocks was when inflation
raged and the economy was in the tank. In short, bad news is an investor’s best
friend. It lets you buy a slice of America’s future at a marked-down price. Europe
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a
and the resignation of a disgraced president. Yet the Dow rose from 66 to
A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings
, as they always have. But most major companies will be setting
new profit records 5, 10 and 20 years from now. hiccups
Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.”
From the chart, you may notice that market rebounded crisis after crisis, a 40+% dropped during GFC looks like a “small blip” along the chart , of course the emotional stress and pain during the crisis were tremendous and unimaginable , seeing your portfolio value downed by almost -40%.
Fortune lost especially for those on speculative or “margin trading” and the world see “wealth transferring “ from one to the other. Investors who are lucky enough and have “gut” to buy during crisis will be rewarded handsomely in subsequent 10-20 years.
F.O.C ( Fear Of Crisis ) vs F.O.M.O ( Fear Of Missing Out)
“The investor’s chief problem—and his worst enemy—is likely to be himself. In the end, how your investments behave is much less important than how you behave.”
PS: Some may be wondering or asking “Are we in the crisis mode now? ”. Definitely “No” as we are still far from 2008/09 kind of level, but for those in the process of “wealth accumulation “ phase , it could be a good opportunity to “buy on dip” since your “investing horizon” is long enough to see the rebound if there is any crisis. For me , I will just stay put and doing some portfolio “reshufflings “ since I am already +70% vested.