Is This The Start Of The Big 2020 Stock Market Crash?
Be careful and proceed with caution
Photo credit: Darrin Atkins
There were big stock market declines around the world today. A lot of companies saw their share prices go down. And a lot of value was lost.
People have a lot of money invested in the stock market in their country and even in other countries. In addition to individual investment accounts, investors have their retirement balances that may be weighted heavily in stocks.
Since the stock market major averages have been doing so well for so many years, the average investor may think that now is a good time to invest. Prior to today, a thousand-point decline hadn’t happened for quite a while.
Now I’m not a stock guru or financial expert or anything like that, so I’m only going to write about generalizations in this article. So if you’re thinking about making a financial decision, you might want consult a finance professional, tax expert, accountant, or someone else before making decisions involving your money or investments.
How much cash do you have in reserves?
This is an important question for every household. Liquid investments are important in so many ways. You want to have plenty of savings for a rainy day or in case of unemployment.
Some people think they can invest a lot in stocks because they think they can sell and get out any time they want. That may be true. But there’s a difference between being able to get out and actually getting out, as in sometimes they don’t sell when they need to or when they should.
Are you following the herd?
There’s the old expression about how fools rush in. Often people will hear about how a company is a new paradigm, completely different than their competitors. These investors may be completely correct, but nobody knows the future stock prices of all companies.
It’s easy to think that you don’t want to miss out on what your peers are doing, and how this or that person tripled his investment in a month. But you need to do what’s best for you and your family.
Are you paying top dollar?
Some investors bought shares today because maybe they took one look at how their favorite company’s share price has been going up, up, and up some more. One question to ask is whether the price today is a bargain or not a bargain.
Which side of the fence are you on?
A lot of people can place themselves in either the yes or no sides of a company. They could give you a long list of why a company is the best business on the planet, while another person could cite a hundred problems that plague the company. It’s a lot tougher to find the middle point.
What about the downside risks?
Some people have a lot of their personal wealth invested in stocks. Also, their memory of the Great Recession may have faded a lot.
I’m not as young as a lot of investors, so my risk tolerance is low. Yes, there is good money to be made in stocks if you have discipline, if you have diversification, and if you regularly monitor and take care of your investments.
If you have big stock investments and are worried about stock market crashes, you and your family members might want to seek advice that’s right for you. Make sure to take the time to do so.
Sometimes financial markets go up and sometimes they go down, and nobody knows how longthet move in these directions. It’s important to help your money succeed so it can help you survive.