Yes, the market appears to be crumbling in front of our eyes. There appears to be more reasons than ever to sell all our stocks. They will surely never recover.
However, for most, nothing significant has changed with their businesses. The absolute worst thing we can do right now (for those interested in long term wealth creation) is take on a herd mentality. That Doesn’t mean don’t ever sell. It means stick to your strategy. Especially now.
Mine begins with not having any money we may need for the next 3-5 years invested. And example of this for me was taking out enough for a down payment on a house which we plan on using in the next year. I took that out in early September which just happened to be the top for my portfolio. It had absolutely nothing to do with trying to time the market.
I just knew, leaving that money invested was one of the only things that could derail our family goal over the next 1-2 years. So I took it out and accepted the potential opportunity cost of making that decision. At the time, I thought I would kick myself as I watched these great companies continue to climb.
Now it looks like a great decision and I’m wanting to kick myself for not taking out more. But I know deep down, I only feel that way because of the benefit of hind-sight and what’s happened over the last month. The natural reaction is to think “I should have seen this coming” but how could we have? If I was trying to time the market, I probably would have been afraid to invest in 2016, 2017, and 2018 (Saul points this out every month in his write-ups…I agree).
So it brings me back to. Keep money I might need in the next 3-5 years out of the market and invest the rest in the absolute best companies I can find thanks to the incredible resoruces we have from TMF, Ticker Target, and all of the IR pages.
Also, these companies have to be looking tasty to some of these larger organizations which are struggling to keep growing,but have built up massive piles of cash.
What if I sell and miss an acquisition at a 50% premium of one my largest holdings…or even worse never get back in, and look back in 10 years saying wow…that sale cost me $800k.
Rick Munnariz, one of my favorite Fool writers/analysts made that mistake with NFLX and talked about it in this great article. https://www.fool.com/investing/general/2016/10/25/my-802179-…
For many of us, outside of getting ourselves in trouble with using margin, or investing money we might need in the next 3 years, that is the biggest mistake we could make.
I’M STAYING THE COURSE…who’s with me?
Let’s create some calm in all this noise and revisit what we think are some of the best opportunities in our stocks.