FULL DISCLOSURE:
I am not a financial advisor. This post is to provide information and not provide financial product advice. I discuss why I personally chose to invest in a stock, ETF, ETNs, CEF, REIT, investment fund or cryptocurrency (which I have held for over a week) and also share information that is public about the following stock, ETF, ETN, CEF, REIT, investment fund or cryptocurrency and they are based on my own personal opinion.
If I do not have anything invested or if I have sold the stock at the time of blogging the article, I will definitely let readers know.
I will not blog about any positions of stocks, ETFs, ETNs, CEFs or REITS and cryptocurrency which were initiated just within the last 72 hours of posting this blog article.
It is recommended that you should always consider visiting a financial advisor for independent financial advice before making investment decisions.
I do not work in the financial industry, so just because I write about it, doesn’t mean you should own it. So, consult with a financial advisor and do your due diligence, RESEARCH!
I am not receiving compensation by the company for this blog post.
I have no working relationship with any company whose stock, ETF, ETN, CEF, REIT or cryptocurrency mentioned in this blog post. Nor do I have a family member or friend who works with the company.
So, you invested in stocks and you just started but now you see everything in red.
Well, first, one thing that you should never do is “Panic Sell”. Unlike cryptocurrency, which is volatile and when things fall, who knows when things are going to get back up.
With stocks, every year there is a pattern where you will see good weeks and bad weeks. When things are bad, typically during a major stock market crash or like the 2020 Pandemic, that is when things look scary. But you still shouldn’t sell unless you absolutely have to.
But here are a few tips which I have learned, that I want to pass to beginners:
- Look at when things are Red as an “Opportunity” – When stocks are in the red and are in a major dip, that is when to buy some shares!
- Be Patient! Buy the Dip! – I’m a believer that you should be patient and not purchase stocks when they are too high. Study the chart and see if there are fluctuations or if it has stayed at its peak for weeks, months or years. Otherwise, if it just reached its highest, I would’t buy. Wait for the dip!
- Do Not Panic Sell! – When we buy stocks, we want to make money and not lose it. No one likes to lose money. It’s scary! But you must understand that a stock usually never stays in the red and it goes back up. Unless you purchased it too high and now it’s come back down to its average. And then you may consider 8%-10% rule.
- 8-10% Rule – If you purchased a stock and made the mistake of buying too high and it has dipped considerably, you have to make a choice. a) Buy the Dip, purchase shares of that expensive stock when it’s low to get a new cost average. b) Hold and Wait c) If you don’t have a high conviction towards the stock, sell the stock at a loss but don’t let that loss go past 8-10%. Just remember, because of the wash rule, you can’t sell and repurchase the stock or buy a similar stock until after 61 days. Or you violate the “Wash Rule”.
- If the Stock is Green, Get to know “Why?” – When things are red, look at stocks that you have been planning to get and if it’s green, try to research why it’s green. For example, today is a red day. But Amazon was green. Sure, they have a new CEO but if you study a company, it’s good to find one that is resilient in days where many are failing.
If anything, just don’t panic! Change your mindset of not feeling bad of losing money but purchasing more shares (if you have high conviction towards that stock) at a lower price to change your cost average.
But also realize, if you purchase shares of a good company, you need to expect that there will be times when it goes up and when it goes down constantly. It’s the nature of the market. But you want to stay with stocks that don’t have huge leaps and huge falls. Look at the company’s chart and look at continuous growth or consistency. Especially if its a dividend stock and seeing if they have had consistency with dividends, going up, versus going up and down or just down.
But these are a few of my tips of how to view the market and your investment when you see your stocks and many other stocks in the red.
