Investing Mistake #2
The following is a quote from an Associated Press article of March 9:
"In the week of the market's Feb. 27 sell off, when the major stock market indexes surrendered their gains for the year, investors pulled an estimated $3.84 billion from global mutual funds that invest in stocks and dumped $1.35 billion into bond funds, according to Trim Tabs Investment Research."
Here's a perfect example of how a rational decision about money is being driven by emotions and not rationality. Head says "buy low, sell high"; heart reads the news, panics and sells equity based securities when the market is going down.
Lesson to be learned: When the market starts to fall let your head, and not your heart, make the decisions.
Or, for fans of the Hitchhiker's Guide to the Galaxy- DON'T PANIC.
For the record, I have increased my bond holdings- but from cash not from selling equity. I intend to make some interest income then buy some boring old cash machine stocks near the bottom (its sheltered in my retirement account so the interest is also earned tax free).
If anyone is reading about the collapse of the subprime mortgage lenders in the United States today, breathe deeply, sleep on it and please talk to a professional before you do anything rash.
Oh yeah- DON'T PANIC.
"In the week of the market's Feb. 27 sell off, when the major stock market indexes surrendered their gains for the year, investors pulled an estimated $3.84 billion from global mutual funds that invest in stocks and dumped $1.35 billion into bond funds, according to Trim Tabs Investment Research."
Here's a perfect example of how a rational decision about money is being driven by emotions and not rationality. Head says "buy low, sell high"; heart reads the news, panics and sells equity based securities when the market is going down.
Lesson to be learned: When the market starts to fall let your head, and not your heart, make the decisions.
Or, for fans of the Hitchhiker's Guide to the Galaxy- DON'T PANIC.
For the record, I have increased my bond holdings- but from cash not from selling equity. I intend to make some interest income then buy some boring old cash machine stocks near the bottom (its sheltered in my retirement account so the interest is also earned tax free).
If anyone is reading about the collapse of the subprime mortgage lenders in the United States today, breathe deeply, sleep on it and please talk to a professional before you do anything rash.
Oh yeah- DON'T PANIC.
Labels: Investement Strategy
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