All Investments Have Gone Down In This Economy
Anybody who has lost money this last year in the stock market may be unsettled. This has been a tough couple of years where almost everyone has come out a loser. The stock market is a place where anybody can look like a fool when it is going down and look like a hero when all stocks are going up.
At times like these it is hard to buy back into the market because of fear but we all know that at some point we need to get back in. Choosing that reentry point is what will ultimately separate the winners from the losers. The people who have the nerve to get back in when prices are low are the ones that will ultimately come out winners.
When you buy more stock at lower prices than you already own some shares, it is called averaging down. For instance, if you own 100 shares of ABC corp. at $100 a share and then you buy 100 more shares at $50 after it has gone down, you will now own 200 shares at an average price of $75.00. You will have averaged down the price of your shares. This is what we will all be doing when we buy back into the market.
Although it may be tempting to buy more of what you have and to average down, it might not be the smartest choice. Most economists and stock market analysts agree that you should be diversified in your investments and that might mean buying other company stocks instead of the ones you already own. It also could be done by buying other types of financial investments such as treasury bills or bank CDs. A good investor never has too much in one asset as that would expose them to too much risk.
Even if you have been properly diversified, you have most likely lost money in this terrible environment. All investments types have suffered as well as jobs and anything else related to the economy. This will not last forever though, and at some point it will be the right time to get back in. Those that are able to recognize the correct reentry point will stand the best chance of cashing in and actually making money. - 23223
At times like these it is hard to buy back into the market because of fear but we all know that at some point we need to get back in. Choosing that reentry point is what will ultimately separate the winners from the losers. The people who have the nerve to get back in when prices are low are the ones that will ultimately come out winners.
When you buy more stock at lower prices than you already own some shares, it is called averaging down. For instance, if you own 100 shares of ABC corp. at $100 a share and then you buy 100 more shares at $50 after it has gone down, you will now own 200 shares at an average price of $75.00. You will have averaged down the price of your shares. This is what we will all be doing when we buy back into the market.
Although it may be tempting to buy more of what you have and to average down, it might not be the smartest choice. Most economists and stock market analysts agree that you should be diversified in your investments and that might mean buying other company stocks instead of the ones you already own. It also could be done by buying other types of financial investments such as treasury bills or bank CDs. A good investor never has too much in one asset as that would expose them to too much risk.
Even if you have been properly diversified, you have most likely lost money in this terrible environment. All investments types have suffered as well as jobs and anything else related to the economy. This will not last forever though, and at some point it will be the right time to get back in. Those that are able to recognize the correct reentry point will stand the best chance of cashing in and actually making money. - 23223
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posted by X - Men @ 12:28 AM
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