Learn how to sleep through these crazy markets.
Recently, the stock market has been quite volatile. It has rocketed to new highs and then plumeted. And then in a few days it dropped over 10%. This is probably one of the largest decreases in percentage terms since the 1987 drop when the markets went down over 20% in a week. It can only be expected that the higher stock markets go, the greater they can fall. The stock market has risen at incredible rates for over five years now, so it seems reasonable that this extrordinary growth comes with the volatility. The internet has probably played a large role in the large stock market increases and decreases. Buying and selling stocks has been made easy with the internet. It is no longer necessary to visit a broker in order to set up a brokerage account which makes it very easy. Online brokerages with margin accounts can be set up by virtually anyone in a short period of time with no questions asked. The internet has also brought information faster to people. Information comes out almost immediately and everyone has access to it. Wireless devices can show stock quotes and other info to anyone in the U.S. as well. It can also work to provoke pannicks from people. Now, chat rooms, forums, and the quickness of the information flow can scare people into selling in a panic or to provoke them to buying. This crowd mentality is the same thing that causes riots and other mass histeria, but it happens in stocks on the stock market. What can be done to keep yourself cool during these periods? 1. Don't watch CNBC 2. Go shopping 3. Go see a movie Well, don't watch CNBC, the cable station dedicated to stocks. That can be worse that having a computer screen full of stock quotes in front of you. Also go shopping or do something to get your mind off of stocks. Or, you can see a movie. Of all of these, probably the best thing that can be done as to look as your stocks as businesses and ignore the day-to-day fluctuations. If you believe you own a good company, you shouldn't feel that its worth any less because the market tells you so. Just accept the fluctuations and focus on important things like the business.
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