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The Right Attitude When Stock Markets Fall Is To Keep Calm, Let Experts Tell You Why

Aug 24, 2015 01:04 PM EDT | By Jon Lindley Agustin

This week started just as bad as stock market on Monday across the world - from the U.S., Europe to Asia - fell and some even plummeting at record-low levels.

Business mogul and Republican presidential candidate Donald Trump made a bad warning on the stock market fall but ended his statement by urging people to vote for him.

"Markets are crashing - all caused by poor planning and allowing China and Asia to dictate the agenda," Donald Trump tweeted on Monday's stocks fall, as reported by The Guardian. "This could get very messy! Vote Trump."

Stock market fall is seen as a major turning point and red flag that economies are headed to a "slowdown," as shown in various economic trends in the past such as the 1997 Financial Crisis.

Currency depreciations, particularly the Thai baht, caused serious stock plunges and declines at as high as 40 to 60 percent, the Federal Reserve Bank of San Francisco said.

Stock market falls also paved the way for the Great Depression which affected the U.S. and the rest of the world in 1929. According to a history information website, it was a Tuesday when billions of dollars lost and banks in the U.S. closed for three days.

Not only did Donald Trump made a warning about Monday's stocks fall, Harvard President Emeritus Lawrence Summers also hinted on what lies ahead.

"As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation," he tweeted.

The right attitude for investors

Midst the stock market fall as the week opened, investment management website Nutmeg.com said investors should do "absolutely nothing" when stock markets are not in a good condition.

"A natural instinct is to sell, or move your investments, but, as history tells us, this can really damage your future returns. Standing firm and resisting the temptation to tinker with your portfolio as its value shifts - when it's up, as well as when it's down - is the cornerstone of successful long-term investing," the website said.

The most common reactions to stock market phenomena are: buying more when markets go up and sell when markets go down to decrease losses.

But according to experts, your way to survival is "doing the complete opposite."

The website mentioned a research by Dalbar telling investors to let their investments stay in the stock market for a "full 10-year period" than moving their investments around. The research, as reported, reveals that a 10-year return is "around one third of pure stock market returns over the same period."

A revolutionary advice given by the U.K.-based investment management website is to add more finances and money to your portfolio when markets fall and go down. When markets go up, they said it is during this time that it is advisable to sell "because those investments have become over-valued."

In Taylor Swift's words, "Stay."

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