Can you take advantage in a falling market?

Team Veye | 01-May-2022 falling market

Currently, global markets are tumbling. Beyond geopolitical tensions, America is also facing inflationary pressures with US Fed possibly taking some recourse in its monetary policy in the coming week.

When the value of the portfolio decreases significantly, it is understandable for investors to get tempted to take their money out of the stock market. But most likely it is not the best course of action.

There’s an old saying on Wall Street: If you don’t sell it, you haven’t lost it. It is implied that the value of your investments doesn’t really matter until the day you need to cash out.

Market crashes are inevitable. No matter how hard you are prepared, there is never any fool proof solution. While a crash in stock markets or a market correction is impossible to predict, there are various strategies that investors can utilize to minimize its impact on their investment portfolio. 

Historical data shows that the best and worst-performing days of the stock market are often not too far from one another. This is the key reason why the strategy of timing the market does not work well for most regular investors.

The first and foremost thing to do if you are a long-term investor is do nothing. Resist the urge to sell in a panic. The key thing to remember is that fear leads to panic, especially among amateur investors. This panic often makes investor sell their investments at low prices during a stock market crash. 

It is a proven fact that though stock market returns can be quite volatile in the short term, stocks outperform almost every other asset class over the long term.

As such, it is advisable to view the stock market from a market of stocks angle. Instead of minding their own business, investors should mind their owned business. The advice of billionaire Warren Buffett, the world’s greatest investor couldn’t be more apt “Be fearful when others are greedy, and be greedy when others are fearful”.

When the market crashes, it provides an open window to buy more stocks for long-term investment as the prices are on the downward threshold and is seen as a perfect opportunity.

But, should you buy the stocks blindly just because they are at a low price? That would be a mistake. The stock market crash also lures investors who want to buy more and cheaper, but that does not mean investors can buy stock blindly. As a stock marketer, one needs to have patience and solid research of the company. Therefore, resist the urge to make panic buys also.

With the macro picture still evaluating, there is a need to let the markets settle down lower. Longer-term markets always do well; longer-term, good companies always do well. And if investors get them cheaper, that is only better.

Disclaimer

Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024

(+61)

SALE IS LIVE

Limited Time Deal:   Over 72% OFF

DIVIDEND
INVESTER REPORT

Dividend-Investor-Report

Each week we cover companies offering a good combination of growth & dividends, maintaining a balance between stable 'cash flow' and risker 'raising stars'. Our guidance helps you choose companies with regular dividends and opportunities for lower-risk capital growth.

  • The best High Yield Dividend Stocks picked by our team of analysts every week.
  • Detailed in-depth Analysis with our expert Recommendations Buy, Hold or Sell.
  • Free Daily Analysis Report to keep up with the latest on what's hot and what's not.
  • Gain instant access to a wide range of Dividend Share Reports, exclusive to members only.
Frequency: Every Tuesday