{"id":29890,"date":"2012-05-27T23:30:43","date_gmt":"2012-05-28T03:30:43","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/05\/use-this-investment-strategy-to-avoid-panic-selling-your-stocks\/"},"modified":"2012-05-27T23:30:43","modified_gmt":"2012-05-28T03:30:43","slug":"use-this-investment-strategy-to-avoid-panic-selling-your-stocks","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/05\/27\/use-this-investment-strategy-to-avoid-panic-selling-your-stocks\/","title":{"rendered":"Use This Investment Strategy to Avoid \u2018Panic Selling\u2019 Your Stocks"},"content":{"rendered":"

By MoneyMorning.com.au<\/a><\/strong><\/p>\n

At the start of May, the market reached its highest level since November 2009. It could have been an excuse for stocks<\/strong> to go even higher, but that didn\u2019t happen.<\/p>\n

When shares go up, typically small-cap stocks lead the market higher. When shares go down, typically small-cap stocks<\/a> lead the market lower.<\/p>\n

<\/span><\/p>\n

You can see that reflected in the chart below.<\/p>\n

\"ASX200\"<\/div>\n

<\/p>\n

Source: CMC Markets<\/div>\n

<\/em><\/p>\n

Now, we won\u2019t focus on the causes of the falling market. You can put it down to a number of things: US unemployment and employment numbers<\/a>; European national debt problems; European bank problems<\/a>; commodities prices; and the Australian federal budget<\/a>.<\/p>\n

Instead, we\u2019ll focus on what you should do when the market falls like this. Should you sell your stocks? Should you leave everything alone? Or should you buy more?<\/p>\n

Well, we know it\u2019s a trite saying, but the time to decide what to do when the market crashes is before<\/em> the market crashes.<\/p>\n

Making a decision to sell, hold or buy<\/a> during a crash likely means you\u2019ll get it wrong.<\/p>\n

For instance, in our personal retirement portfolio we haven\u2019t sold a single stock.<\/p>\n

Why? Because we\u2019re comfortable with how and where we\u2019ve invested our money.<\/p>\n

We have a bunch of cash earning interest (probably less interest thanks to the Reserve Bank of Australia\u2019s interest rate manipulation), we have a few dividend paying stocks that are still paying a dividend, and we own a handful of micro-cap stocks that we know could either halve in value or double overnight.<\/p>\n

Oh, and there are the gold<\/a> and silver<\/a> investments too.<\/p>\n

In short, whatever the market conditions, we\u2019re always looking to be a buyer rather than a seller.<\/p>\n

If you find yourself selling a stock you own in this market, it most likely means you were over-invested in it. And it\u2019s never a good idea to be in that position. All we can do is suggest you follow our advice and split your savings into \u2018safe money\u2019 and \u2018punting money\u2019.<\/p>\n

We\u2019ve outlined this idea here in Money Morning<\/em> several times since the middle of last year. The breakdown looks like this:<\/p>\n

\"\"<\/div>\n<\/p>\n

Remember, this is just a suggestion. As an example, here\u2019s how we\u2019ve allocated our retirement savings: 35% cash<\/a> and term deposits, 40% gold and silver<\/a>, 15% dividend stocks<\/a>, and 10% punting stocks.<\/p>\n

But just because that suits us, doesn\u2019t mean it will suit you. You may prefer to allocate more or less in each of these investments. It comes down to what you\u2019re comfortable with.<\/p>\n

The bottom line is to make sure that if you do want to sell a stock it\u2019s always on your terms rather than when the market scares you into selling.<\/p>\n

Kris Sayce<\/strong><\/p>\n

Editor, Australian Small-Cap Investigator<\/strong><\/p>\n

From the Archives…<\/em><\/strong><\/p>\n

Free of the Dragon: Why the Energy Market Doesn’t Need China<\/a>
\n2012-05-25 – Kris Sayce <\/p>\n

China Stirs Up Troubled Waters in the South China Sea<\/a>
\n2012-05-24 – Dan Denning <\/p>\n

How Chinese Stocks Are Fading Fast<\/a>
\n2012-05-23 – Lars Henriksson <\/p>\n

LNG: Why Australia Will Be a New Global Gas Leader<\/a>
\n2012-05-22 – Dr. Kent Moors <\/p>\n

A Shocking Week for China’s Economy<\/a>
\n2012-04-21 – Dr. Alex Cowie <\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n


\nUse This Investment Strategy to Avoid \u2018Panic Selling\u2019 Your Stocks <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By MoneyMorning.com.au At the start of May, the market reached its highest level since November 2009. It could have been an excuse for stocks to go even higher, but that didn\u2019t happen. When shares go up, typically small-cap stocks lead the market higher. When shares go down, typically small-cap stocks lead the market lower. You … <\/p>\n

Continue reading “Use This Investment Strategy to Avoid \u2018Panic Selling\u2019 Your Stocks”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-29890","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/29890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=29890"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/29890\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=29890"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=29890"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=29890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}