Markets are falling, there is widespread panic, people are selling, retirement savings are being eroded, there is a bloodbath everywhere.
Above are some of the headlines making waves across the world.
Whilst majority of speculators, gamblers, traders and undisciplined investors run for the hills, the educated and smart investors are doing the below:
1. Going about their daily lives - spending time with their partners, kids, walking their pets etc
2. Keeping calm in the knowledge that if they have bought well, a correction or crash in the markets do not erode the intrinsic value of the companies in which they have invested.
3. Possibly getting ready to invest further because a market pull back may represent a buying opportunity.
4. Remaining confident that even when share prices drop temporarily, dividend incomes may not be affected.
5. Feeling positive about the future because they have a strategy and a plan that is not heavily dependent on consistent double digit returns.
6. Maintaining a rational sense of the fact that successful investing is a marathon, not a sprint.
7. Feeling a sense of control in the knowledge that they have a risk management plan in place that has considered diversity of strategy, diversity of product, selection of quality assets, emergency cash reserves and a contingency plan to ride market movements and dealing with adverse events.
In the meantime, ordinary people are doing the following :
2. Feeding the market noise by participating in it.
3. Abandoning their financial plan and strategy, if they indeed have one.
4. Watching the news nervously.
5. Forgetting that market corrections and crashes are normal.
6. Telling everyone that "this time it is different".
7. Giving up all hope in the capitalist system and the resilience of the human race.
At times like these, it may be wise to remember the words of the great Warren Buffet when he said -
"The stock market is a device for transferring money from the impatient to the patient".
- Ron Malhotra
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