Lessons from past market plunges - and my single biggest regret in reacting to them

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Some advice for investors seeking direction during the turbulence

This translation has been automatically generated and has not been verified for accuracy.You learn a few things after witnessing multiple stock market crashes, a global financial crisis and too many corrections to count.

Do not expect instant validation of your nibbling away at falling markets. It could take a year or years.The problem with selling in a panic and sitting in cash is that you have only solved one problem. You’ve halted your losses, but not positioned yourself to benefit when stocks start rising again. You might think you’re protecting your portfolio by getting out. But you could be doing long-term harm by missing out on gains ahead. Cash in your brokerage account probably earns you nothing, and most of the easily accessible investment account parking spots for cash get you a little more than 2 per cent at best. Inflation, by the way, hit 2.4 per cent in January.

Professional money managers live in a different world than individual investors. They’re constantly accountable for their work and thus have to be more reactive to market events. If they buy into a falling market that plunges further, they have to wear it. So expect to hear a lot of chatter about how it’s not yet time to buy.By the time the pros are telling you to buy, they will have already snapped up the bargains they were eyeing.

 

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