The Great Correction of 2018 is here. It's been a tough week for investors and especially for me. After a prolonged time of prosperity and profits, the stock market finally corrected and corrected in a huge way, with the Down Jones falling more than 1,000 points (1,000!) multiple times in just one week and hitting some individual stocks and investors (yours truly) even harder.
It stated innocently: After Super Bowl Sunday when the Philadelphia Eagles shocked the world with a backup QB to beat Tom Brady and the Patriots (which of course looking back might have a harbinger of things to come, kinda like when the Cubs won the World Series led to Trump's presidential win), everything seemed right with the world on Monday, until the stock market started in the red.....and just kept going. And going, fueled by a mid-day low of being down $1,500 points. Watching that decrease on Yahoo! Finance firsthand is NOT a good feeling when holding individual stocks/ mutual funds. Tuesday saw a "snapback rally" in which the Dow rose 500+ points to gain back some of the losses and prompting some "experts" to say that Monday was a great buying opportunity!
In Japan, the term for sales or stocks decreasing is called "Migikatasagari," or falling down as the graph goes to the right." And that's exactly what the stock market did this week, arrow falling down and falling down quickly towards the right.
Tips for the average schmo like me for investing:
1.) The market does NOT go evenly........It can rise slowly and steadily for a year, and give back all of those gains in a matter of days, hours even........that's why they call it a "crash," because it can happen so suddenly, and without much warning.
2.) It hurts much more to lose the same amount of money than to win that same amount of money. Winning the money is like, Nice! A piece of candy, but losing that same money is like a dagger to the heart, you question your own self worth and what you could have done with that money if you just hadn't been that greedy.
3.) Turn off yahoo! Finance for an hour and just don't look at it. It gets to become an addiction, always checking for updates because it's like fresh information or checking game scores: you're just hooked on the results and you have a lot of money on the line.
4.) Don't invest more than you can afford losing. If you put money into anything, just be prepared of the worst case scenario: what if you lose it all? (same case for gambling, except that's much more likely to actually end up in losing everything). If you invest too much, it becomes like gambling and you're hooked onto every move of the market and can't pay attention on anything else when the market is in session, and even if it's not in session can't sleep well because you're worried about waking up late on the West Coast and missing out on some huge shift in the market........the best way honestly is just set it and forget it, look at it once every day and make an informed decision.
5.) Just because the stock market's doing well doesn't mean it will always be that way. Don't get lulled into a false sense of security, and ESPECIALLY don't get lulled into adding more money into the account to try to greedily make more money (I committed one of the cardinal sins of investing, I feel like).
6.) Think long-term, not short-term. Don't buy a stock thinking you're going to sell it in a few hours when it goes up. That's called speculating. Buy it because you believe in the fundamentals of the stock and the future prospects of the company. That's called investing.
7.) Last lesson applies in fantasy sports, stocks, and life really......don't dwell on the past and how much money you've lost or won in the past......it's easy to think about all the sunk cost, but when you buy a stock or sell a stock, no one cares how much you won or lost on it before......the stock market is going to keep going in one of 2 ways.........just figure out which way it's gonna be on the RIGHT side (migikata) of the graph, not the left side.
What I learned through this whole week is that I'm not good at gambling, and I'm not good at "playing"/ speculating on the stock market. Investing as in just buy and hold as an investment? That's not terrible, although even that can lose money! But I can't control my emotions and more importantly my thoughts when handling money of that magnitude. It happens with gambling too when there's money on the line........my heart starts racing, I get excited, I care too much about winning money but even more about losing it. Greed, buyer's remorse, berating myself for NOT buying in and missing my shot........everything becomes a chance to second guess my decisions and woulda coulda shoulda, which eventually makes me emotional, irrational, and lead to bad decisions. ESPECIALLY in a choppy market where "runs" on the market happens often. I just can't handle it and tend to sell low (Ahhhh the sky is falling!) or buy high (Oh no way we can lose! It's a sure thing!), which you never want to be in the business of.
Fantasize on,
Robert Yan
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