Stock market investing is not that hard. If you have the training, experience, and right system in place to manage stock market investments, there are much more difficult jobs.
Brain surgery comes to mind. I would bet you that a brain surgeon would say that the job is also easy if you have the training, experience, and system in place.
A rocket scientist would say the same thing. So would the people who are looking for Malaysia Airlines flight 370 in some of the deepest oceans in the world.
There are only five mechanical things that an individual investor needs to do.
- Protect your gains: If the stock market decline continues, set a dollar amount of stock market losses that will trigger a sell point.
- Cut your losses: You may own some stock market investments that have lagged the popular stock market index benchmarks. Now is the time to take your recent gains and have that money available for the next great stock market decline.
- Manage your risk: There is no law that states the individual investors need to participate in 100% of stock market cycle losses.
- Use stop losses: Set a percentage level drop from the recent stock market highs as a point where you will not tolerate any more stock market losses.
- Stick to the first four points: The last five-plus years of stock market gains have been historic. The most important part of your stock market investment management strategy now is to keep as much of those gains as possible.
Stay calm, have a plan, and follow the plan. This is not the first stock market correction that you have lived through. And it will not be the last.
Ric Lager
Lager & Company, Inc.
