The past number of months have been really tough for investors. And in recent weeks, stock values have plunged even more, leaving investors reeling.
You'll often hear that it's important to stay calm when stock values plummet. And that's definitely good advice. It's also advice that's really, really hard to follow. And I should know.
I'm one of those people who writes articles all the time about how important it is to keep your cool when the stock market takes a turn for the worse. The reality is that the market has a long history of recovering from downturns and rewarding investors who stick with it.
But let's be real -- it's hard to not get upset when you see your portfolio value tank in a matter of weeks or months. In fact, my stock portfolio is down about 25% this year. That's due to general market turbulence and the fact that I own a number of retail and tech stocks, and their shares have specifically fallen over the past number of weeks.
I try to make a point not to check my portfolio balance too often during periods like this. But even without checking, I follow the market closely enough to understand how sell-offs impact my portfolio. And right now, things aren't looking rosy.
I'm not going to pretend that I'm not bothered by the state of my portfolio -- because I am. And if you're worried about your investments, that's perfectly natural.
Flip out, but also, breathe
Imagine your stock portfolio was worth $400,000 at the start of the year, and it's now worth $300,000. If you were to liquidate all of your positions, that would potentially translate into a catastrophic financial loss. So it's OK to acknowledge the stress of that situation.
To simply say, "Hey, your investments are down hundreds of thousands of dollars, but it's all good, man" just isn't helpful these days. I'm here to tell you that yes, it's OK to flip out over the state of the market. And it's also OK to tweak your approach to investing in light of recent turbulence if that makes sense for you.
The one thing you shouldn't do, however, is dump stocks while they're down. If you do, you're only going to guarantee yourself losses that could take years to recover from.
The fact that my portfolio is down 25% this year has me experiencing a host of emotions, from annoyance to anger to occasional panic. But the one thing I keep telling myself is that I have no plans to tap my portfolio for decades, and as such, there's no need to get too worked up. Just as importantly, I refuse to fall victim to fear to the point where I start to cash out investments and take losses in my retirement plan or brokerage account for no reason.
Stay the course
You may be experiencing a whirlwind of emotions as stock market turbulence occurs. And it's OK to freak out about the losses you're seeing on screen, as long as you pledge to do one thing -- leave your portfolio alone. You may not be able to simply shrug off recent stock market events, but don't let them drive you to make poor decisions that hurt you financially in the long run.