Take A Deep Breath... And Make A Plan
As Brad Biggs said..
Fear is coming back.
Last Tuesday, the S&P 500 Index closed down by 0.67%.
Then… on Wednesday… boom! Another decline.
On Friday, the Dow Jones Industrial Average dropped 665 points, or 2.5%. That’s the largest percentage decline since June 2016.
But Monday was the worst of all. After a wild ride of a day, the Dow closed down 1,175, the largest single-day point drop in history.
So, is the sky falling?
The market has been doing fantastically well. I know I’ve been pretty damn giddy about it. Hopefully you’ve enjoyed it, too. But during times like these, it’s absolutely critical that you perform routine “gut checks” on yourself. You don’t want to find yourself doing it when the market goes to hell in a handbasket. That’s when mistakes get made.
The spike in volatility we’ve seen recently – and the unusual down market days we’ve seen this week – probably have more to do with inflation and interest rate concerns at this point, rather than signaling the end of the bull market altogether. The truth is, days like this are not that unusual at all. We’ve just forgotten what “normal” looks like. It’s not necessarily a sign that the bull market is over yet.
So by all means, yes, participate in this bull market. But don’t panic when the market has an off day or two. Remember, there have to be sellers as well as buyers in order for stocks to go up. So let the sellers have a day or two here and there. Meanwhile, the best thing you can do is enjoy the ride and make sure you have a plan in place to get out with your profits in the most pain-free manner when the time comes.