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Do not panic!
Do not let yourself be swayed by emotion when it comes to investing! Take falling markets in your stride! Going up or down is what stock markets do.
Keep in mind that downswings are temporary and last for shorter periods than market upturns. Studies have shown that markets go up 70% of the time.
So stick to your strategy, hold onto your investments and wait. Patience is your best asset and you will be rewarded by unfolding events! This is what history teaches us!
Do not try to second-guess the market!
A study carried out in 1997 by U.S.-based Dalbar shows that investors who stick to their investment strategy outperform those who try to beat the market by switching investments.
According to this frequently cited study, U.S. equity fund investors made annual gains of 6.71% from 1984 to 1997. During the same period, the Standard & Poor's 500 index climbed 17% annually.
This shortfall of more than 10% in investors’ returns is explained by their impatience. By dumping their holdings too quickly, they lost out on significant gains that only a long-term holding strategy can generate.
The investments that we keep will turn out to be the most profitable!
Buy rather than sell!
Stock markets do fall from time to time but that should not be a reason for selling your holdings. On the contrary, you should think about buying more during downturns!
Indeed, falling markets provide excellent opportunities for picking up low-priced securities that have the potential to rebound when the upturn takes hold. Do not let bargains slip through your hands!
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