$SPDR ETF(SPY)$ $Tesla Motors(TSLA)$ $NVIDIA Corp(NVDA)$
The hardest decisions require the strongest wills - Thanos
A very apt quote to describe the stock market. In a bull market, everyone buys. Rising tides lift all boats, and some more than others. The more the meme, the more the green, and everyone wins.
But in the bullish downturn, thats where things start to get tricky. People start questioning the viability of stocks without fundamentals ($GameStop(GME)$) and currency created years ago by anonymous individuals ($iShares Bitcoin Trust(IBIT)$). Ultimately, the hardest question is probably this:
"What if this is the beginning of a bubble?"
Some might be afraid of buying more for fear of further losses. Others might be afraid of selling for feear of losing out. But most are just too afraid of doing both, for the simple fear of being wrong.
So how do we manage such a situation?
1. Be content with what you have.
Sell stocks when you are satisfied with the profits that you have earned, and keep those that you think have the potential of going up further. If you are unsure, selling some stocks might help stave off the itching feeling of losing shld the stock go down, and also help you preserve profits should the stock go up. Dont go chasing the green candle, you might end up losing more than you gained.
2. Buy stocks with good fundamentals.
Easier said than done, especially when meme stocks are doing double digit returns, daily. But the higher they go, the harder they fall, and all balloons eventually end up in the ground when the helium dissipates.
Stocks with good fundamentals/moats have the ability to buffer against these loses. The underlying fundamental of the stock sets a floor price to the valuation: Anything lower and you are getting the stock at a discount. Of course, this hinges on ones ability to value the stock, but with the internet these days, the hardest part is not finding the information, it is finding reliable sources of it.
Of course, keep some funds for memes too! But keep this portion small, lest it leaves you in financial ruin.
3. Trade or invest with the macroeconomy in mind.
Even the strongest stocks will succumb in a poorly performing economy, so remember to keep some cash in a cash fund, ready to be deployed when the time comes. The constant returns of about 5% should make you reconsider everytime you feel like investing beyond your means. Useful questions to ask would be whether your stock can beat this return after weighing in the risk associated with the particular stock.
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Ok, thats it from me. But i leave you with this:
Comments
Good reminder as to how we should be content with what we have when investing
Very tru[Cool] [Cool] [Cool]
Good read!!