Markets are going to be volatile. It’s nature of market.
Some stocks go up 50% or even 500%, people never complain. They barely are even thankful for windfall gains.
Some stocks go down 50% and people start complaining.
Let me reiterate, this is stock market and volatility is name of the game.
No matter how hard you try, how strong your research is, how experienced and calculated you are; you’ll once in a while experience shock / set backs. All investors face it. Even the legendary ones like Buffet did. (Read Dexter Shoe investment case study)
Either the market as a whole will correct/crash, the stock you own may go down for variety of reasons, the economy may go down, tariff wars may happen, interest rates may get hiked, recession may kick in, etc, etc.
If you’re not prepared for that, you’re going in for a tough time.
In such situation it’s always necessary that you have patience and tolerance.
Bad things don’t last forever. Markets eventually recover.
Have a well diversified portfolio. I ideally prefer limiting 5-10% allocation of my portfolio in a single business and I have advocated this for past 10 years to all the investors who are connected with me. It contains the risk in case a mishap happens.
It’s hard to imagine having 2-3 stocks concentrated portfolio and 1 of those stock go down by 50%. That portfolio will bleed with deep cuts.
And mishaps are bound to happen. You can’t control it. Only thing you can control is how you behave. And your behavior determines how big money you’ll make. And a well diversified portfolio.
Whether you throw in the towel and quit or you keep calm & stay the course despite the temporary hardships. The choice is yours.
