To say that we’re living through unprecedented times is something of an understatement in the investment world. In 2008 the world melted under the impact of the financial crisis. Then we saw the longest bull run in history. And now, the virus that Bill Gates predicted is wreaking havoc and investors are losing their minds.
It is worth noting, however, that the world has seen its fair share of catastrophes in the past. Barely anyone talks about the 1987 crash that preceded a pretty massive recession, but it looked like the end of the world at the time. And when Bear Stearns went under twelve years ago, investors thought that they were staring financial armageddon in the face.,
Of course, the world recovered and moved on. And those investors who kept their heads during the panic did the best.
But how exactly do you keep calm and carry on when something is shredding the economy? What do you focus on?
Ignore Paper Losses
Ask any forex broker their number one tip for staying in the market, and it is to ignore paper losses. Even if you bought your asset at a higher price than it is now selling for, that doesn’t mean you’ve lost money. You only lose when you sell.
In most situations, it is a good idea to hold onto the assets you own, even in a downturn. Eventually, financial markets will take their course, there will be a correction, and life will move on. What’s more, stock prices will continue to rise, in general, and humanity continues to make economic progress. We’ve done well over the last fifty years and will continue to do so over the next fifty. For the most part, investing is a long game.
Sometimes, though, you need to cut your losses, particularly if you’ve invested in a stock and believe that the company will go bust. If that happens, there’s no way back.
Remember Historical Trends
Throughout history, the stock market has shifted up and down with the times. That’s just the way it goes. But overall, the pattern is clear – the market tends to rise – and it will likely do so in the future. The only reason it won’t is if technology fails to progress and governments shut down capitalism. Right now, there’s no desire among the general population. People, it seems, want free and voluntary trade more than ever. Just look at the wealth it creates!
Focusing on historical trends can keep you going through a rough patch. Things might look bad now, but in a couple of years, this episode will be a part of the history books, and life will resume its ordinary course.
Remind Yourself You’re Playing The Long Game
Unless you’re a professional trader, you should be playing the long game. In other words, you should be willing to put your money into the market for many years before you take it out again. Most retail investors – people like you and me – lose money when looking for a quick buck. Some get lucky, but most don’t. It is always better to leave your money in the market long-term. Eventually, you’ll see a return.
