Navigation aid for the stock market storm

If emotions then come into play (and this can hardly be avoided, as investing involves a lot of money), the chaos is perfect. In bull markets, investors invest in worthless dog coins and invest on credit; in bear markets, they sell everything they can and vow never to “invest” again. Until they are caught up in speculative fever again in the next bull market – again, of course, at the stupidest possible time, just before the next downturn.

A few tips for navigating the stock market storm can therefore do no harm.

First, be prepared for pain. “Stock market profits are pain and suffering. First comes the pain, then the money,” stock market guru André Kostolany once said. If you prepare yourself mentally for a rollercoaster ride before investing, the inevitable ups and downs on the markets will be more bearable. It is easy to panic right now. And that would be the biggest mistake. Because in the long term, investors will be compensated for the emotional pain on the stock market with handsome returns. Nobody said investing was easy.

Secondly, follow Warren Buffett. His advice is not to buy anything that you don’t want to leave in your portfolio for ten years. Do you want to invest in a Doge Coin for a decade? Would you like to hold the shares of a tech company domiciled in the Cayman Islands for ten years, which promises a lot, provides hardly any insight into its figures, has never made a profit, but still pays its management princely salaries? Exactly.

Thirdly, gain distance. If you are glued to the stock market prices every day and keep checking your account balance, you will be emotionally affected. In the short term, chance decides whether prices rise or fall. You suffer with every setback and with every price change, the risk increases that you feel the urge to “do something” – be it to stem losses or to pocket profits. “I can’t just sit back and watch!”, you might object. Yes, yes, doing nothing is quite simple. And it also minimizes costs. My recommendation: check your portfolio no more than once a quarter. It’s easier on your nerves and there’s a better chance that the value of your assets will have increased in the meantime.

Fourthly, ask yourself whether you can in good conscience recommend an asset you are thinking of investing in to your best friend or your mother-in-law (I’m assuming you have a good relationship with her). If the answer is “no”, you’d better leave it alone, because then it’s most likely a dubious investment.

Fifthly, create an investment strategy – and stick to it! There’s no going back and forth, but the constant implementation of your plan will bear fruit in the long term. Successful athletes don’t change their training program every week and change their diet completely on a regular basis. Consistency is the name of the game.

While these recommendations will almost certainly not make you as rich as Elon Musk, they should help you avoid the biggest pitfalls. And in the stock market, that’s half the battle.

With this in mind: stay disciplined!

Yours, Mark Stock©

Mark Stock is a member of the Point Capital editorial team. “I am a stock market enthusiast and am passionate about economic history. I have been following the ups and downs of the markets for years and, of course, invest myself – preferably in shares. So my name says it all. Every month, I take up what I consider to be an exciting topic. And since the focus is on the content and not on me personally, I write under a pseudonym.”