Whenever market corrects, investor’s behave as if they’ve seen a ghost.
Market corrections are part & parcel of investing.
In fact, After a long rally like we’ve seen in past few days, I’m even more happy to see markets correct because:
1. It indicates there’s sanity around & it keeps euphoria at bay. Broadly speaking, euphoria is in fact more deadly than market corrections because euphoria kills long term sustainable gains.
2. As & when market corrects, it brings us the opportunities to buy stocks at cheaper valuations.
3. If the markets don’t correct & keep rising towards the sky, you’ll be forced to hold cash (which loses purchasing power every year with inflation) or you’ll be forced to buy at higher valuations deteriorating your margin of safety.
Long story short, we need regular market corrections. The earlier you understand & accept this, the better investor you’ll become.
As weird as it may sound, a bull is more happy to see stock prices fall because it gives yet another opportunity to buy fresh quantities & ride the stocks when markets recovers and mint more money.
Next time you see the markets correct, rather than getting depressed, rejoice!
