The stock market is impacted by major world events, rumors of mergers, and bankruptcy. If you have seen the news lately, you will know there is the threat of Russia invading Ukraine. For those trading in the stock market, it could mean big dips are coming.
Risk of Investment
Last month I wrote about learning about the stock market. If you’re new to trading the media saying Putin will invade on Wednesday may make you think you need to pull out right away. What if you you have short term investments? Will you lose it all? How far will the market go?
Consider watching and holding at this point. In addition to the impending invasion, the US market will be releasing earnings reports later this week. Both of these will make for movement in the market. If the earnings report is favorable, the market may rise or level depending on invasion status. Last Friday the market closed on a low after Biden announced US citizens should leave Ukraine immediately. If the stock you are in is at a current gain for your investment, you could choose to sell before these two events change the market.
Let me challenge you with this perspective. Yes, you could lose a lot and there are reasons to potentially pull out now, BUT what if you consider your stock as going on sale when these events happened? For example, March of 2020 the market crashed due to the pandemic. Since that crash we have seen all time highs for the market! If you bought in March of 2020 and held them until today, you could have made a lot of money. For reference: QQQ sold for $170 on March 19, 2020. Today QQQ is selling for $347. If you bought 1,000 shares of QQQ that day in 2020 you would have made $177,000 holding it until today. Just because the market takes a dump doesn’t mean a great depression, in fact it most likely won’t. If you have the mindset that the stock market is going on sale soon, you will be in a good position to make purchases that will serve you throughout the year. That means, make sure you also have the cash balance to do some trading! Don’t allow your emotions to dictate what you trade. Have a plan for every trade you make.
If you have a hard time with keeping your emotions out of it, take a look at a previous post of mine. If that is you, maybe you should consider having someone else do it, or do long term investments and don’t look at what the stock market is doing. Long term investments like ETFs, such as QQQ, are much less risk because they have many businesses in them. Don’t completely forget about it, but definitely buy it and don’t stress over it. Maybe looking at it quarterly.
The stock market will fluctuate depending on what is going on in the world and with business news. You can either look at it as a scary prospect of losing money, or you can look at it as the stock market going on sale when prices take a steep dip. This week we have two major reasons for the stock market to be more volatile, the earnings report and the impending invasion of Ukraine. If you have a hard time with keeping your emotions out of your trading, consider the options I laid out in a previous post. Here’s to learning and winning!
How about you, what do you think when the market crashes?