Recently, a participant in my online masterclass asked the question;
What are the 3 action steps to take during market panic?
There has been a lot of fear in the markets recently.
Compared to the overall market, ask yourself how has your portfolio been doing?
Is there cause for you to be concerned?
I know that watching your portfolio decrease in value isn’t pleasant, but the following 3 questions and action steps will help you get through the downturn.
1. First of all – do you have a long-term investment portfolio, a trading portfolio or both?
Segregating your portfolio into either a long term investment portfolio or a shorter-term trading portfolio is a must.
Why is this important?
For long term investments, a volatile market that is on a downward trend opens up new opportunities.
You can either add new stocks that are undervalued and have finally ‘gone on sale’ or you can choose to purchase more of your current holdings at a lower cost.
When it comes to short-term trades, don’t forget to ensure that you have tight risk management parameters such as stop losses set up.
To avoid being tossed around in a volatile market, make sure that the majority of your portfolio is back in cash.
If you don’t mix your long-term and short-term investments, you are less likely to panic and sell at low prices which, in the end, will affect your long-term outcomes.
2. Secondly, ask yourself if you would still buy the current stocks you hold in your long term portfolio if you get another chance?
Knowing the answer to this question will help you make a decision when you find yourself wondering whether you should sell what you currently own or purchase more of what you already have.
3. And finally, are there any sectors or industries which have clearly been oversold in this panic to take advantage of?
Think of the market as a machine.
When looking at the short-term, the market is a voting machine.
In the long term, a weighing machine.
Your best chance of success is to buy into strong companies that are not only capable of weathering the storm during tough times, but also thrive.
They thrive because their competitors are either taken over or disappear, clearing the way for those that survive to grow even stronger in the future.
So watch where other successful investors are putting their money and you will notice that they are always capitalizing on inexpensive valuations in selective sectors and industries.
This is the foundation upon which they build their reputation and secure successful long-term performance.
Maximize these 3 Action Steps by Predicting a Market Crash in Advance
So to summarise, today we covered these action steps you can take during market panic. These steps are:
- Segregate your portfolio into either a long term investment portfolio or a shorter term trading portfolio.
- Decide whether you will buy more of what you have, or sell what you have.
- Buy the strongest companies which will not only survive but prosper during hard times.
By keeping a level head and following these action steps, you will be able to successfully overcome challenging markets.
Go after the opportunities that are waiting for you, rather than running away in fear like so many investors do. This will set you apart.
By the way, if you’d like to not only confidently survive, but also even thrive during market panic, I recommend you join me in my next FREE live online masterclass.
It’s called How to Predict ANY Market Crash, Protect your Wealth, and Profit Safely.
It’s a highly interactive class, complete with your own downloadable workbook, and I guarantee you’ll walk out of the Masterclass with a completely different filter of the trading and investing world.
If you’d like to join me, book your spot here, and I’ll see you on the other side.