I just invested in Amazon, Apple, and a couple of other smaller companies a couple weeks ago and am starting to panic with the major slide occurring. Should i bail or hold on?
Do what your investment plan tells you to do.
Ask yourself some questions:Why did you buy them?Just because everyone else was?Because they looked like a good deal?Because you just want to get into the market?If the reason to own them is no longer there, then sell them. If it's still there then hold them. Anytime you make a stock purchase there is the potential for loss of capital. If you're not able to lose that money then you shouldn't have it in the market. At the same tune, you need to be able to stay committed and disciplined. Some people look at fundamentals. Some trade on technicals. But all people that find long term success have a plan. If you have a plan you answer that first question up there. If you didn't then you likely can't.If you don't have a plan then get one. Read, ask questions, read some more. If you're antsy to miss the market's performance stick to whole market ETFs and index mutual funds while you get that education. It reduces your risk while you learn the ropes. The market often pitches and rolls. You need to be able to do things when the market tanks:Sell the companies that no longer fit your plan.Keep the ones that still fit your plan. It takes some time to develop confidence in your decisions. And it takes some experience. It's easy to get shaken by a downturn. One of my biggest mistakes was NKE some two thousand years ago. I was just starting out stock picking and Nike seemed like a good opportunity. They had hit a speedbump with shoe sales dropping as Jordan neared the end of his career and Tiger had not yet reached phenom status. The street had punished Nike a little, publishing an endless string of negative short term calls. I was reading a book on valuation and trying my hand at a fundamental valuation of NKE. I concluded that the company seemed expensive based on the analysts growth projections but fairly priced based on Nike's historical track record. Nike was just beginning their foray into women's performance wear and expansion into China. The street wouldn't trust that Nike could deliver on those initiatives. I thought that two new growth drivers (women are half the planet and China's kind of a big place) gave Nike lots of new avenues.In the short term the street was right. The focus on slumping shoe future orders pressed the stock down. I worried that I was wrong despite still feeling pretty certain I was right. Six months or so later the stock had recovered from its drop and was slightly up. I was right! Then it flattened a second time and I worried again, feeling relieved when I eventually pulled out with a small gain. All this despite still feeling like I was right.Fast forward decades and I was completely right on Nike, but horribly wrong on my trading decisions. That little slump was just a glitch and Nike churned on like the marketing machine it is. That little bit of stock would be worth six figures today.The point is that it's hard enough to have strength in your convictions when you're confident in your reasoning. If you don't have that kind of certainty going in, your hands will be weak far too often. Have a plan. If a stock no longer fits that plan then get rid of it. If a stock goes down but still fits the plan, keep it.If you're not able to do that yet, I'd suggest staying away from individual stocks; at least in large quantities. Index the majority of your funds and maybe play with a smaller portion of your funds to learn the ropes. As you get better, you can change that formula. If you want to chase the FANGs, then you need to be able to look past their volatility. It's their nature. They're a trader's heaven that can become a trader's hell in a heartbeat.
Should i bail or hold on?The bottom line is, no one really knows.In good times when everything is going up, its easier to invest. But right now there is uncertainty in the market for a number of reasons. That makes for volatility as big money tries to decide what to do or anticipate the trends.We know that stocks go through corrections from time to time. Most don't last very long. Usually you are best off to hold on and wait for the recovery. Occasionally stocks go through major declines. In one of those you will wish you sold.Most use a guideline that if a stock is down 10 to 15% from its high, you should review why you bought it and decide if it is still a buy. Perhaps your timing was off. It was the wrong time to buy.Some of the volatility comes from investors who decide to sell, hold cash and wait until things settle down a bit. But that can be a long wait. And returns from those fixed income investments are not so attractive.If in doubt, the best choice can be to get out. But 50/50 you will end up selling at the bottom before recovery begins.Flip a coin. No one knows.
Flip a coin. No one knows.Paul, Ironically. That is actually a good answer. The forecast success rate for supposed "experts" across many disciplines is around 44%, or worse than a coin-flip. But that doesn't mean that attempting to make forecasts --which every investor and every trader is trying to do-- is a waste of time. One just has to have a good sense of when to trust the forecast and when to ignore it, so that one is making an informed bet, instead of a blind-faith guess. Obviously, the OP bought on the basis of no due diligence or evidence, just hope. Predictably, he's now losing money and is clueless what to do next for failing to plan before acting. Oh, well. The markets depend on dumb money coming in at the top, and there's no reason to upset that predator-prey relationship. https://www.valuewalk.com/2017/12/the-anatomy-of-a-bubble/
I think most investors are into longer term investment. Research convinces you that some select stocks are likely to do better than others over the next few years.Short term predictions next hour or next week are extremely difficult. Few have crystal balls that accurate.
I think most investors are into longer term investment. Research convinces you that some select stocks are likely to do better than others over the next few years. Short term predictions next hour or next week are extremely difficult. Few have crystal balls that accurate.Paul, Most so-called "investors" aren't 'investing' in any meaningful sense of that term. They're just gambling, and they depend on hope and bull markets to bail them out of their mistakes. But as Dalbar's 20-year studies document, they mostly fail miserably "to get it right". Price predictions/forecasts are no more easy/difficult short-term or long term, because market time is fractal, as Mandelbrot has demonstrated. Also, a high degree of forecast accuracy is important only when payoffs are symmetrical. Arindam
I would argue that industry leaders well established in their business segments are likely to continue doing well in coming years. That is not 100% guarantee and does not always translate to increasing share price. But it is an edge compared to many other players.New companies can do very well but their gains are more speculative until they establish themselves as leaders.
Paul, You're assuming our Ponzi scheme of an economy won't blow up. Sometime, when you're truly bored, plot measures of genuine economic activity vs asset prices. The two have become increasingly disconnected.
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