It's no secret that the stock market has taken investors on an incredibly turbulent ride over the past two months. And while we can tell ourselves as investors that this volatility will eventually settle, it's still a hard thing to grapple with.
I learned that the hard way when I violated one of my key investing rules — don't check your portfolio on a day when stocks tank. On March 7, the Dow fell about 2.4% while the S&P 500 dropped 3% in the wake of continued turmoil overseas. These dips are on top of the falling values stocks have faced since January.
All told, when I glanced at my portfolio, I saw that it's down about 13% from where it was at the start of the year. That's somewhat in line with the broad market's performance, so it shouldn't have come as a shock. Yet when I looked at my balance on screen, my heart did a flutter (not the good kind) and I felt my pulse start to quicken.
But after taking a minute or two to wallow in the fact that my portfolio down, I made another important move — one that could spare me from losses while we ride out this wave of volatility.
I walked away
Some investors react to market turbulence by unloading stocks when they're down in an effort to minimize losses. But that doesn't actually minimize losses. If anything, all it does is lock them in.
That's why, upon seeing my portfolio balance, I took a deep breath, stood up from my desk, and walked away. I knew that the longer I sat there analyzing my different positions, the more tempted I'd be to consider selling underperforming stocks — even though doing so now is clearly a bad move.
And so I took that option off the table. I walked away and went into my kitchen to cook some dinner. And that was that.
Coping with on-screen losses
Even though I've been investing for well over a decade, it's never easy seeing my portfolio consistently lose value from week to week. But the one thing I have to keep reminding myself is that the losses I'm seeing are on-screen losses — not actual losses.
Now I'm not going to start dumping my stocks due to the turn my portfolio has taken. But I may make a couple of other moves.
First, I plan to revisit my watchlist of stocks and see if any are worth scooping up right now. I might also load up on a couple of broad market ETFs.
What I like about ETFs is that they let you own a bunch of different stocks with a single investment. And there's less brainwork involved — rather than analyze individual stocks, I can simply put some money into the broad market and see where that takes me.
Another thing I intend to do — and this is more of a multi-week task — is filter more cash into my brokerage account. If stock values continue to sink, I'll probably want to capitalize on that opportunity by buying stocks on the cheap.
To be clear, I'm really not happy about the current state of the stock market. But it's also something I've been through before. And while I did, admittedly, allow myself to indulge in a brief moment of panic, it's what I did — or rather didn't do — afterward that will hopefully, in time, allow my portfolio to recover.
10 stocks we like better than Walmart
When our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn't one of them! That's right — they think these 10 stocks are even better buys.
Stock Advisor returns as of 2/14/21
The Motley Fool has a disclosure policy.