One of the hardest things to do with money in the market, is to hold on for the ride. The easy way out is to simple sell everything and curse the day you thought you could make money in the market. I’m not surprised that some people may feel this way. I think too often, people expect their money to only go up. But after ’08, I wouldn’t blame you for taking your money and going home.
People saw 30%, 40%, even 50% or more losses in less than a year. Something most people never experienced and for some, should never have been in that position. It’s one of the major faults with a 401k. Even though many people have a good understanding of how to invest, there’s even more that don’t, yet are pushed into it blindly by their own retirement plans.
The stock market isn’t built for everyone. To paraphrase Warren Buffett, people who can’t handle a 50% loss in their stock’s value, shouldn’t own stocks. There has to be an emotional disconnect between you and your money. It’s the only way to maintain sanity. But is easier said than done.
When the market collapsed in Oct. ’08 most people eventually took their money and ran. Fear set in, which caused a bigger sell off, causing even more fear, and more selling. Until it finally bottomed in March ’09 with the Dow around 6500. People took the pain all the way down until they couldn’t take it any longer. They finally got out of the market, but it was at the worst time possible. Right near the bottom. Continue Reading…