I woke up this morning and saw a few Whatsapp messages “Walau”, “OMG”, “Oh Dear” and wonder what happened.
Well, it looks bad.
Going by the definition of correction being 10% decline and bear market 20% decline, the US market is almost in correction now. However, the market has also been climbing up since 2009, so there is a huge downside if this heads into a bear market.
You might want to revisit my article Fear And Greed to better understand emotions during market gyrations.
Many people have perhaps anticipated the decline may come soon. Heading into 2018, I first mentioned a possible market crash in 2018. But nobody really knows when there will be a crash.
During times like this, it is important to stay cool headed. While Warren Buffett famously said “Be fearful when others are greedy and be greedy when others are fearful”, it is easier said than done.
I will stick to buying into the stock market progressively and pick stocks of great economic moat and are undervalued. That’s essentially what value investing is about.
Finally, be sure to only invest with money that you do not need to tap into in the short term. Even if say the market crashes tomorrow and most stocks in your shopping list are hugely undervalued, you do not know when the market is going to recover.