WHAT TO DO WHEN YOUR STOCKS GO DOWN
Feelings and emotions drive human action. Pain is the number one factor that causes someone to take action — and fear is number two.
When you look at your account and see less money today, than you did yesterday, your natural emotion will be fear.
Nobody wants to lose money.
That’s why I’m going to break down what you should do when your stocks go down.
Successful investors have a unique ability to control mindfulness and regulate emotions. This is why Warren Buffett, one of the top 5 richest people in America, says, “Be greedy when others are fearful and fearful when others are greedy.”
Psychologists have actually created a therapy to help people do this. It’s called DBT treatment.
Everyone knows they should buy low and sell high, but when they see people making money as something skyrockets they get excited and decide to buy. Then when things start tanking they get scared and sell. This is the exact opposite of what they know they should do.
So what should you do when your stocks go down?
First, if you don’t know what the company is worth — you shouldn’t own the stock. Have you valued the stock to know that it is a good investment? If not you should sell.
Because you don’t understand the company’s value, it will be very hard for you to hold when the stock goes down.
Now, if you know what your companies are worth and you know it’s a good business this is what you should do when the stock goes down — buy more!
Most of the Chinese stocks I own are at multi-year lows. But, instead of wanting to sell, I want to buy as much as I can.
Here’s why I’m comfortable doing that…
Before the China-US trade war rumors started Weibo was up over 400% in just 3 years, Alibaba was up over 140% in just 3 years, and Autohome was also up over 140% in just 3 years.
Since the trade war media frenzy started, these same stocks are down 40%+. Their fundamentals haven’t changed. Their growth projections haven’t changed. Therefore, their value hasn’t changed. Now I can buy more shares of these great companies at a 40% discount.
I’m the founder of Green Financial Solutions, a Beverly Hills investment advisory firm. I help people invest in the best businesses. Then I help them use that money to buy money-making rental property. To learn more about how I can help you click the link: https://greenfinancialsolutions.net/wealth-roadmap/
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