I can confidently say that as an investor, you should always expect both the best and the worst from the stock market and its prices. The stock market crash for different reasons, and it may also boom for different other reasons. So, whenever you hear stories about the crash or impending crash of stock prices, instead of being scared, you probably should get excited. Weird right? I know it sounds weird, but I will explain why in a minute. What we may be experiencing right now in the stock market could be a blip, but it could also be the beginning of a bigger crash. However, as I said, there is no need to be scared.
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In this blog, we will be discussing what is happening in the stock market and my expert opinion on how to go about it. So, without wasting time, let us dive straight into business.
Stock Market Crash in 2021?
Something happened last week with stocks, and we will be discussing it shortly. How many of you saw headlines that indicated a stock market crash or slide-in stocks since the end of 2020? Yes, I will admit that stock prices went down, but it is too early to talk about a crash if you ask me. Of course, some of the top indexes like DOW, NASDAQ, and S&P 500 may have gone down a bit, but it may be normal with stocks.
Well, for the past week, most top companies that make up these indexes seemed to all be reporting their earnings at about the same time over the last week or two. Logically, when this happens, there is bound to be a bit of volatility because it does not always happen. This event made many brokers try their best to restrict trading on some of these stocks. In the twinkle of an eye, the overall situation of the market turned from greed to fear just because of one event.
Whenever fear creeps into the market, it is normal for investors to try to sell off high risk or lower quality stocks because of the level of uncertainty that comes with volatility. As a smart investor, this could be the time to observe your portfolio. The market is experiencing some level of volatility, no doubt, and it should also reflect on your portfolio.
However, how badly it reflects on your portfolio may be related to how well or badly you have been trading. So, if it reflects badly, maybe it is time to readjust and start making better investments. There are many reasons for the stock market crash like I said earlier, but my guess for this one may just be that many investors have made enough profit and are looking to sell-off. When many investors are thinking this way, it will definitely lead to general sales at about the same time, ultimately leading to a blip in the market.
Recent data from CNBC collected over the years indicate that what is happening now is normal, and it may only take four to six months for everything to go back to normal. So, why the panic? My prediction for the next couple of weeks is that there may still be more selling and volatility. Some stock prices may still dip further, but the overall health of the market should not be a cause for concern or worry just yet. Stocks always go up and down, and that is surely how it is meant to be.
Now, with all my experience in the world of investment and the stock market, I can confidently say this; I am not selling any of my major stocks just because of some normal events that are happening in the stock market right now.
First, I am always as careful as I can be when acquiring stocks, so I have enough faith in most of the companies. That faith permits me to hold on to the stocks no matter the volatility. I mostly sell stocks not because of the volatility in prices but because of the business itself. What I mean is one of the major reasons I sell stocks is if the business is no longer going as I expected, not because the prices are going up and down.
However, I have built up enough cash, and now I am waiting to see more potentially successful opportunities so I can take them. Being an emotional investor in the stock market is not healthy. You could lose all your investments to a calm and collected investor in the twinkle of an eye. Before I got to this level of experience and calmness in the stock market, I can say I was once an emotional investor.
I may have learned my lessons the hard way, but you do not need to make the same mistakes, and that is why I make these blogs. There are other stocks that are showing promise out there despite their fluctuating stock prices. All you need to do is take advantage of them.
It is my belief that I have been able to calm those fears of yours about the stock market crash. You should always be prepared for the worst as you plan for the best in investments. However, seeing investment as a long-term thing will certainly do you good. Just remember, the stock market is healthy.
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Recommended books for further reading:
- The Financial Times Guide to Investing:The Definitive Companion to Investment and the Financial Markets: The Definitive Companion to Investment and the Financial Markets
- Shares Made Simple: A beginner’s guide to the stock market
- How to Make Money in Stocks: A Winning System In Good Times And Bad
- A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market
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