It's been a tough month for investors. During these times, investors should be sticking to their fundamentals to weather the storm. But so often, this is not the case. When the needle drops, investors abandon everything they know and start acting crazy. This is a very, very bad idea.
It may seem obvious, but please don't sell into a down market. I understand it's painful to watch your retirement fund spiral down in a matter of weeks, but we have to remain logical.
Yes, there is a good bit of data out there that suggests the international economic climate is suffering from global warming. The collapse of Greece will likely damage your portfolio in the short term, even if your companies are completely insulated from the country's woes. But you are the wise, long-term investor. Look at your stocks' fundamentals. Regardless of the macroeconomic conditions, a good company at an attractive price will help you over the long run, even if we witness the destruction of the eurozone.
Take a look at Regions Financial
Mmm... cheap stocks
On the other side of panic selling is panic buying. While there are some great stocks on sale right now, don't be fooled by some of the super-low-valued companies.
Investors learned from 2009 that when the market panics, it's time to buy. That is very true, but don't buy on the fly. Some are arguing that Groupon is an industry leader with an amazing reach that holds a strong international position. I would concede that Groupon is an industry leader, if it's in the industry of money-losing. And what happens when Google releases its attack on local ads that is rumored to be able to severely hurt the competition? What other business does Groupon have to fall back on?
The lesson here: Cheap is good, but don't stand under a falling piano.
Too much information is a bad thing
It's tempting to read absolutely everything you can about the stocks you own. Why wouldn't you? We are taught that reading, reading, and then reading some more is the best way to understand our investments. It's what Warren Buffett does, right? This is all true, but again, be careful.
With the advent of the Internet came the Golden Age of Nonsense. The Internet gave a voice to the voiceless, and also to the moronic. You can now type in anything, and you'll find plenty of opinions. The problem is, the more opinionated pieces you read, the more tempted you are to act. In long-term investing, less is more. It pays to read the last three years' worth of SEC documents, but not necessarily every article you encounter.
If you read everything that has come out recently regarding Sirius XM
Roller coaster of hate
The market will recover, I guarantee it. I also guarantee that after that recovery, at some point in the future, it will again fall back down. This trend will never end, so get used to it. Now, it's rare that I would recommend letting someone else manage your money for you, but if the stress of a roller-coaster market is too much for you, it may be worth it to look at a fund. Our analysts have identified a few ETFs that are well-managed and hold a promising future. Check out the free report "3 ETFs Set to Soar During the Recovery."
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