Five Reasons to Stay Calm When There’s Stock Market Drama

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Is the glass half full or half empty? While you decide, I think I’ll drink up all the water in the glass.

Before you knee-jerk react to this sell off in stocks, consider this:

  1. China’s black Monday was not a big surprise. Those who pay attention have watched growth rates in China slowdown for years.
  2. It was only a matter of time. Normalization of the markets was expected and overdue because the stock market is supposed to care about risk, and declines must happen and are healthy in order to break the ‘no-risk’ return perception.
  3. Your financial advisor should tell you that the stock market is the only market where when everything goes on sale, everyone runs out of the store.
  4. Stock market shocks (and corrections) happen when you least expect them. That’s why they call them shocks.
  5. Stocks don’t go up or down in a straight line and sell-off’s of 10% happen in every type of market. It’s been four years since the last real correction.
The urge to ‘do something’  can be powerful. You have to vote with your money but the time to cast that vote and manage risk is beforehand, when things are calm, not after a dramatic downturn. 

3 Comments

  1. Liz says:

    The urge to jump ship was tempting and fear driven, until I read this article as Pam started channeling what my deceased father (an avid investor) would have advised. I’m sure everyone in my pre-retirement age group (and others) are extremely concerned. I’m sure this will be the topic discussed at many dinner tables over the coming days. But, as was discussed in item #4, as panicked investors began to sell today, did people take note of the buyers picking up on the bargains?

  2. Cynthia Osterman says:

    Pam, thanks for this article. These are really good reminders. As I watch the market zigzag, I keep coming back to them to help me keep a level head.

  3. Cindy Baron says:

    Thank you, Pam. Reassuring words during difficult financial times!

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