The market fallout happened as the world media continue to sensationalize geopolitical news. Actually, even though the market is moving significantly, most of us are not fully aware of the situation between Ukraine and Russia. All we know is that many governments officials around the world are against the recent decisions made by Putin. The only thing that truly affects the bulk of us is the stock prices moving faster than usual and in this case, in a bad way. So what are we to do now? Or rather, what could we have done? When markets retreat, it’s unavoidable to feel silly when you held on to your stocks at all-time highs but somehow many of us are led to believe that it will always go back up somehow. In today’s post, I will be explaining how I reacted since the start of the year as an investor, hopefully, my sharing will help more investors benefit from the next correction.

Selling to take a decent profit is never wrong

Taking profit takes guts to a certain extent hence, it requires much practice to be good at it. However, what I notice is that many investors are spoilt in the recent market rallies in the US. Instead of selling, investors are taught to buy more at a higher price over time. That itself is based on an insane logic because the market already recovered to pre-pandemic levels in the mid-2020 but let it continue to climb all the way until the 3rd quarter of 2021. What we learn from this madness is that many people are obviously trapped and or burned by the market fueled by greed and cheap money flushed into the system. Right now inflation is at all-time highs and investors who are fully devoted to the US market are likely to be in the red after holding for more than a year faithfully. Whereas if they would have sold at a decent profit, then they would probably be able to buy back now at a significant discount.

Don’t hold on to stocks in hope of much higher profits

Call it whatever you want but stubbornly holding on is mostly due to greed. The purpose of holding should always be backed by reason. When you see a company’s market cap go up by 100% when the economy is in turmoil, that’s all the red flags that you can ever get from the market. I mentioned multiple times in this blog that we should be rational when we invest but knowing that many are already blinded by the trend lines of deceit, it is understandable that many investors can no longer stay objective in those circumstances. In the future, always stay grounded and understand that investing should always be a sustainable activity and not out of blind hope and greed.

You will never earn money by accumulating stocks until you sell

Yes, you made 40% at some point but you have not made a single dollar until you execute the trade. Since the pandemic, I saw many people posting their amazing returns from the stock market and showing off how successful they were through investing. But it is unlikely that they have made any money because they would never have sold any of their shares or assets thinking that the market is still going up for some reason. Therefore, learn to sell and let the market run hot and wild as much as it wants. Ultimately, we should still lock in profits and reinvest them appropriately into other investible assets. (not the same asset as it climbs further)

Closing thought

I wrote this post in response to many people having mixed feelings right now over the market’s disappointing turnaround. I hate to say I told you so especially when it is of little comfort to anyone at this point. Surely the market has not gone down more than 10% but the point is that the price of the stocks accumulated in the later stage of the rally would have started canceling out much of your profits by now. So learn how to sell and stay objective even when the market and the world have gone mad.