Stock prices are down. Down, down, down. And I've been surprised to hear people talking about cashing in their stocks.
The mass media seem to portray the stock market as something that reflects fundamental objective reality (like a textbook), or something that controls our destiny (like a god), or something that tells us what to do with our money (like Ann Landers). The truth is that it is a market. It's about buying and selling. And buying and selling are heavily influenced by emotion.
The stock market is ruled by the basest and most fickle human traits: greed and fear.
When the market is down, that is the worst time to cash in your investments. You're supposed to buy low and sell high, remember? This is the time to buy and hold. Buy diverse, that is, and hold for at least five to ten years.
Dave Ramsey says the stock market has never lost money on any single ten-year period. Even during the Great Depression, if you bought diverse stock at any point and held it for ten years, you would have made money.
When the Dow is sinking like the Titanic, don't go buying in the stock market for the short-term, and don't gamble on any single stock -- but above all don't sell the long-term investments you have. Keep the college fund and the retirement accounts! If you have liquid cash, consider buying more! It's on sale.
3 months ago
