Obviously, severe market declines are very unsettling. We can't help but fear the worst. And the source of much of the market decline, the corona virus, is equally disturbing.
Here is an excerpt from Chapter 9:
" Over the long-term, the stock market has consistently yielded positive returns. But we know that, from time to time, the stock market will decline significantly. Not could decline significantly. Will not react to them. With Simply Successful Investing, you are in it for the long haul. Learning to drown out the noise of the markets will enable you to achieve a far better investing outcome.
The old investment chestnut 'buy low, sell high' may sound easy. But realistically, in the heat of the moment, our emotions scream out the exact opposite. Sadly, the lure of quick gains and/or the fear of missing out compels legions of investors to buy when the noise is positive and the prices are high. And overwhelming fear compels many poor souls to sell when they just can't take it anymore, when prices are at their lowest and all hope seems lost.
Let's go back to 2007; stock markets were hitting all-time highs and Canadian stock market investors were feeling mighty fine about the fabulous gains they had experienced over the previous few years. In the meantime, many savers who had avoided the risk of the stock market could no longer handle missing out on the action and jumped in. But by the fall of 2008, stock markets around the world were in full panic mode as the global financial system seemed on the verge of collapse, with diminished economic activity and mounting job loss. Many Canadian investors experienced 30–40 percent declines in the value of their stock portfolios, and many 'experts' predicted (hourly and breathlessly) the worst was yet to come. Unable to withstand the stress and unwilling to risk further 'paper' losses, thousands of investors crystallized those losses by dumping all their stocks and mutual funds. A very unfortunate reaction, but totally understandable.
The fear was palpable and pervasive, but selling 'locked-in' these severe but short-term market losses. Investors sold their 'businesses,' most of which continued to be very profitable, at fire sale prices, and were left watching from the sidelines as the economy recovered, companies once again began to produce record profits, and stock prices reached record highs. "
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Your Market News update for May 30, 2019 | View online Market News News that's moving the market now As Trade-War Worries Linger, Market Seems to Lack Buying Conviction May 30, 2019 8:40 AM | JJ Kinahan 6 min read | Daily Market Update