Global markets all have corrected lately. Many
of you who are new investors might have entered panic mode,
where you are unable to relax and have lots of stress and depression.
It must be for somebody who just started investing in either
stocks or mutual funds two months ago to see a notional loss
of 30% or more now.
Here are seven simple ways to survive a stock market
correction as an investor:
1. Stop Listening To Analysts Forget listening to analysts- most of them
won’t be of any help. The reason people listen
to analysts is because they are looking for peace
and hope. You will get none of that by listening to
somebody else. Peace and hope are all within you.
2. Stop Staring At Your Portfolio Every Thirty
Minutes Another mistake people make is that they
get up every morning and wait for the markets to open.
Once markets open they start staring at their stock
prices. A fall makes you feel worse and small rise
makes you feel a little better. This won’t help
either. Instead keep track of the fundamentals of
your company every time the results are out. If your
company is profitable and growing - be happy. If it
isn’t, find out if you need to exit. The stock
price will catch up in the near future if business
is growing.
3. Be Patient
Many of you might not have a lot of cash to buy cheap
now; however please be patient with whatever you have
bought.
4.
Speak To Actual Investors With Experience Instead of interacting with analysts or your
broker, speak with people who are actual investors and
who have been in the market for longer periods of time
than you. They will tell you how they have survived various
stock market corrections and what has made them richer.
Read and learn more about people who have actually created
wealth and sustained it over a long period of time.
5. Stop Following Crazy Tips Stop following ‘hot’ tips which promise
to make you a millionaire in a matter of months. Maybe
the ‘hot’ tip is only meant for billionaires
who would end up as millionaires in case they do follow
the tip. If it seems to good to be true, it is probably
just a scam, which hopes to take money away from retail
investors and put them in the hands of greedy manipulators.
Similarly stop following rumors about how fundamentally
strong companies are going to be shut down and go bankrupt
in the next few months. Use your own head and trust yourself.
6. Understand Market Cycles Every asset class has a cycle. Stock markets,
mutual funds, real estate all move in cycles. Realize
that nothing can keep going up forever in a single direction.
There will be phases when prices will come down and
again move up. If you go back into history you will
see several instances when stock prices came down, however
over a period of time quality companies always reward
investors. Understand market cycles, and don’t
become a slave to them.
7. Follow The Guru Today the richest man on earth, Warren Buffett,
is an investor who has created wealth because he has
stayed away from what everybody else is doing and has
simply invested in quality companies for the long term.
He invested in Gillette, for the simple reason that
he believed that men won’t stop shaving. It makes
sense to follow, as I call him, “The Guru”
and think long term and remember people who create wealth
do things that others don’t.
If you follow the simple techniques above you will be a much
happier and a calmer investor. Investing is about controlling
your emotions and being disciplined about what you do.
