Investing lessons from a market sell-off

As a beginner in stock investing, I’ve learned some basic lessons, hopefully not too painful to shun stocks all together. They sound very simple but are not easy for amateur investors to avoid. So you would need to be constantly reminded. In your portfolio, there will be stocks that are going up/down since you bought them. Stocks going down can signal a bad sign, or simply a longer wait before they shine. Always think what-if scenarios since they could happen, no matter how unlikely. When doing that, you’ll have a better chance to fight against your emotions.

STOCKS GOING UP
– Gains are good, until they’re no longer there
– Timing for a top is very difficult. I sold BA and MCD before they went down for a correction and I thought it was simple. Wrong! And now I’ve missed several opportunities to sell
– Set a trailing-stop-limit to sell stocks that are still flying high, even if you like it, but might turn around and go down. This locks your gain in case the correction is bigger than just a blip
– Opportunities always exist, do not think you have missed the boat, the next one is coming sooner than you expect.
– If you really like the stock, or waiting for dividend: You can sell a portion of your position, not all at once

STOCKS GOING DOWN

  • Money is limited, cash is king, think about tomorrow
  • Timing the bottom is very difficult
  • Averaging down on a good stock is good, until you’re out of money
  • Monitor the fundamentals and market signs for negative changes that could make it a bad stock
  • Looking at intraday charts with the technicals, you’ll get quite excited! You can finally buy the stock! Yay! But it might not be the best price

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