Taming The Bear ๐ป : Managing Market Declines ๐
Markets have been a bit volatile over the past few weeks, and the future is uncertain.
For many investors, these moves can be troubling because itโs been many years since weโve had a substantial declineโwhether we do or do not from the current point (and, for the record, I think itโs much more like the market surprises us with new highs sooner than anyone would think possible),
we need to spend some time thinking about how to manage our portfolios and manage ourselves in a market decline.
First, watch YOUR LANGUAGE
โขLabels are meaningless: Correction, pullback, โjust words
โขListen to the terms people use: fake, rigged, propped up, short covering rally. The words we use matter because they carry emotional meaning.
UNDERSTAND MARKET PSYCHOLOGY
โขMarket moves are mostly emotional.
If you donโt understand that, youโre doomed to be at the mercy of the market.
โขThe news doesnโt matter (for prediction.) You need a plan for how you read the news!
โขMarket movements arise from competitive action of traders driven by both reason and emotion. This is why the market creates such emotional reactions in traders and investors.
โขThe โpermabearsโ are interesting (and dangerous).
โขLearn to monitor and understand your own emotions and reactions.
UNDERSTAND THE REALITY OF THE MARKET
โขMarkets are mostly unpredictable. No one knows what is going to happen in the future with any degree of reliability.
โขBest guide is statistics, but need to understand what this means:
~On average, stocks go up over long time periods.
~Hard to short stocks.
~Strange things happen on shorter time spans.
~What is predictable in the future is fuzzy and uncertain, and deviations can be large.
โขMost of the things people talk about follow the market, so they canโt be used to predict the market!
~The market is the leading indicator.
(Dow)
WHAT TO DO?
โขThe biggest mistake investors make is selling into declines.
~How to avoid? Donโt do it.
~Best plans are fading (going against) moves in stocks. If you implement this one rule, youโll be ahead of the game.
โขAlways use limit orders. Always. Always.
โขBuy at steep discounts, planning to hold for multiple years.
~Be a predator
~Buy โstupidโ prices for things you are reasonably sure arenโt going out of business/away
โขBe your own manager.
~Break destructive patterns
~Stop mistakes before you make them
CONSIDER SHORTING
Shorting is not evil or (that) complicated, but this is a topic for another day.
Listen To 'After Dark - MrKitty' Such A Nice Music in Time like this.....(this music is overrated lol)
and Wishyou Profita- Strong In This Weeks.!!
Sc:
AdamHGrimes Podcast
For many investors, these moves can be troubling because itโs been many years since weโve had a substantial declineโwhether we do or do not from the current point (and, for the record, I think itโs much more like the market surprises us with new highs sooner than anyone would think possible),
we need to spend some time thinking about how to manage our portfolios and manage ourselves in a market decline.
First, watch YOUR LANGUAGE
โขLabels are meaningless: Correction, pullback, โjust words
โขListen to the terms people use: fake, rigged, propped up, short covering rally. The words we use matter because they carry emotional meaning.
UNDERSTAND MARKET PSYCHOLOGY
โขMarket moves are mostly emotional.
If you donโt understand that, youโre doomed to be at the mercy of the market.
โขThe news doesnโt matter (for prediction.) You need a plan for how you read the news!
โขMarket movements arise from competitive action of traders driven by both reason and emotion. This is why the market creates such emotional reactions in traders and investors.
โขThe โpermabearsโ are interesting (and dangerous).
โขLearn to monitor and understand your own emotions and reactions.
UNDERSTAND THE REALITY OF THE MARKET
โขMarkets are mostly unpredictable. No one knows what is going to happen in the future with any degree of reliability.
โขBest guide is statistics, but need to understand what this means:
~On average, stocks go up over long time periods.
~Hard to short stocks.
~Strange things happen on shorter time spans.
~What is predictable in the future is fuzzy and uncertain, and deviations can be large.
โขMost of the things people talk about follow the market, so they canโt be used to predict the market!
~The market is the leading indicator.
(Dow)
WHAT TO DO?
โขThe biggest mistake investors make is selling into declines.
~How to avoid? Donโt do it.
~Best plans are fading (going against) moves in stocks. If you implement this one rule, youโll be ahead of the game.
โขAlways use limit orders. Always. Always.
โขBuy at steep discounts, planning to hold for multiple years.
~Be a predator
~Buy โstupidโ prices for things you are reasonably sure arenโt going out of business/away
โขBe your own manager.
~Break destructive patterns
~Stop mistakes before you make them
CONSIDER SHORTING
Shorting is not evil or (that) complicated, but this is a topic for another day.
Listen To 'After Dark - MrKitty' Such A Nice Music in Time like this.....(this music is overrated lol)
and Wishyou Profita- Strong In This Weeks.!!
Sc:
AdamHGrimes Podcast
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