Did you lose money in last week's market drop? You didn't have to! Here's why
Last week
wasn’t a good one for the stock market, to say the least, with the DOW dipping more
than 300 points on Friday alone. But is that really a big deal? I mean, what
else should anyone expect the stock market to be doing? Keep going up all the
time?
Of course, I
understand what it means: some folks are losing hard-earned money that is
earmarked for their retirement. But let’s look at reality here. When your money
is invested directly in the stock market, is what happened on Friday out of the
ordinary?
If you are
calling your advisor looking for the exit because you think the market is in
some kind of a freefall, I can understand. But the fact of the matter is that you’ve had the wrong investment strategy all along.
It’s rather
unfortunate, but many unsuspecting folks have fallen victim to having an
unrealistic and completely bogus expectation of how the stock market works. The
only expectation you can count on when it comes to the market is that it will
either go up or down. So, on the one hand, things could turn out really well
and you could make a boatload of money; but there is also the opposite
possibility that your investments won’t be very successful, to the point that you
could end up losing everything. That’s hard to swallow, but again we are
talking reality and the true range of possibilities here.
If you are unwilling
to live within those extreme possibilities, perhaps you should consider investing
in a way that will enable you to make money up to a certain cap when the market
goes up, but will protect you from losing anything when weeks like last week
happen – which is entirely likely at some point during your investing life.
Personally,
I think we might have a little less drama and people could go about their daily
lives more smoothly if so-called financial advisors and media money experts gave
folks the straight facts and enabled them to consider the full range of investment
possibilities.
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