Investing minds during market crashes
As the market enters a mini correction phase, I started to see people panic and a lot of “interesting” comments surfaced. It’s clear that fear flooded a bunch of people, whilst greed infected others, and the rest are just dumb-founded.
So, here’s a few things that go through my mind as I (humorously) go through those comments of “Cut loss”, “buy the dip”, “crash is coming”, etc.
I saved the best for the last~!
Investor vs Traders
If you’re thinking I’m going to say that investors don’t have to worry and traders do… well, that’s not true.
As both myself, I know that we could definitely sail through with a peace in mind (and profits) in both accounts.
As an investor, my investing time horizon is for years and the choice of investment is targeted. Hence, a market crash is a great opportunity to buy more (aka buy the dip). The biggest condition here is that the fundamentals of the investment remains the same. If the fundamentals changed, then there must be a consideration to cut loss.
As an options trader, I have benefited from both increasing and decreasing share prices. As my positions are short term (around a month), it is important to be attuned to what the market is doing. There are always hidden gems waiting to be uncovered. However, as a trader, there is always a risk of being in the wrong side when the market turns and cause losses.
The issue is not being an investor or a trader. The issue here is being an investor with a trader mindset, or the other way round. That’s when panic sets in when things don’t go in our way.
We invest / trade with the knowledge that the risk is always there. And the risk for both styles are different.
The Investment
Remember this? (GME pump and dump)
They called it a meme stock.
Did people make money? Yes, a lot.
Imagine entering at USD38.50, you would still be up today. Or if sold at the high. Sweet.
Did people lose money? Yes, a lot.
Can you imagine entering the stock at the high of USD483? That’s an 80% loss based on the latest share price.
Are you still holding on to it waiting for it to go to the moon? I sure hope not.
If you’re a short term trader, entering stocks like this could make you a fortune. The investment needs to jive with the type of investor you are.
Keeping emotions in check
Is impossible.
We will be elated when our investment generates above average returns.
On the other hand, our world turns upside down when our investment is experiencing losses.
We are humans after all and we’re creatures of emotions.
However, if you’re too stressed over your investment, then you should consider changing your investment style and assets. I used to do intraday trades and I did make some good money there, but I decided to stop that completely because it takes a toll on my mental health and I didn’t like it.
Focus on the things we can control (how & what we invest), and not what we can’t (the investment’s performance).
After all that
If you still find yourself checking and worrying over the daily ups and downs of the market, then you probably have too much time on your hands. Go find things to do and occupy your time.
Looking at the market’s ups and downs is pointless when you have already decided to invest for the long term and will Dollar Cost Average at fixed intervals.
BTM only checks the market daily to find new trades / investment opportunities, and spends at most an hour or so at specific time of the day. I got better things to do, otherwise.
Stay invested, stay sane, and enjoy the ride.
