The Market Giveth and Taketh

It Can Get Scary Out There: Be Ready

The stock market has just shown us that it doesn’t always giveth; sometimes, it taketh, and when it does, it can be pretty scary if you don’t fully understand it. 

Since 1970, the S&P 500 has declined about one out of every five years. And it’s not just the developed markets experiencing turbulence—the emerging markets are also having a tumultuous time, with currency swings causing further havoc. That’s how it rolls. 

The question is… how do you roll?

Rolling with the Punches

Rather than anguish through downturns that could be three times as steep as this blip, you should learn to always position yourself to earn some benefit from them. The key is to keep a cool head and a strategic mindset.

You do this by regularly adding to your investments and keeping some cash aside (generally at least 10%) to take advantage of opportunities that fall like manna from the heavens. Warren Buffett always keeps cash on hand for that very reason.

Avoid the Pitfalls of Market Timing

Don’t be the person who tries to time the market, fixating on every up and down, worrying about the drops, and feeling anxious about the “loss.” Nor should you be the person who is always 100% invested and has no room to maneuver when the market gets rocky. Remember—the “loss” is only a loss on paper.

As Wealth Chefs, we’re in this for the long term and know that these downturns and periods of volatility are huge opportunities to add massive value to our wealth pots. Be the person who is taking advantage of dollar cost averaging and, without a worry, knows they are snapping up bargains through their regular investing, getting more for their buck when the market goes down.

Seize the Opportunity in Market Declines

Also, be the person who can step in and make great new investments when others are panicking. Being in that position helps you keep your investments and financial feast on a steady course. Price declines often make you want to act in some way. If your response is to buy quality at a discount, you’ll be acting like a real Wealth Chef.

Prepare for the Downturn Before It Happens

Thinking about how you want to behave in a market downturn can help you prepare before it happens. Wealth Chefs know that a market downturn is a huge opportunity. You’ll be acting to your benefit during the decline, rather than reacting destructively in the face of it.

Questions to Ponder

I’ll close with some questions to help you reflect:

• When prices decline, will you be ready?
• Will you be able to capitalize with at least some of your money?
• Will you be able to stay the course on your existing regular investments?
• What will you remind yourself when you find yourself in a falling market?

P.S If you want to learn how to get your investments set up in a safe and secure way, I have a free Investing workshop for you where you will learn how to implement a proven investing strategy, the exact strategy that formed the base of my financial freedom and a strategy that I still use to this day! 

This is how I ensure I am able to capitalise whether the market is giving or taking! 

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