Dow dropped more than 8.5% last 5 days.
TSX dropped more than 4.5% for the same period.
One of my major American stocks Alphabet dropped more than 10% for the same period (I thought Alphabet had a pretty good quarter but does not matter. It just crashed just like other stocks through massive selloff.)
I know and you probably know by now that I am crazy in a certain way.
I believe that correction is healthy as long as it is supported by fundamentals.
It has been long overdue. It is finally here and you know what? You should happily embrace it.
My major readers here are mostly fall in 30-50 years young and your investing horizon is another 20-40 years. You have many hundreds of monthly paycheques coming to you for further deployment. Would you want to buy stocks at higher prices or lower prices? I have been very struggling to deploy my capitals lately so I am quite happy that the correction is here.
In 2 year or 5 years from now, it would likely recover and reach higher price points anyways so why don’t we embrace buying stocks at cheaper prices now so that you can make higher returns 5 years from today?
I don’t want to my individual stock to drop because of deteriorating fundamentals. I probably would selloff that stock or should not have purchased it at the first place but I love entire market selloff that brings down price of all stocks.
Hyman Minsky, an intelligent American economist said that future problems are born by long periods of calmness. We have been having this 8 or 9+ years of bull markets. It probably is time.
I always wanted my stocks prices to be as aligned as their fundamentals. I don’t want the prices to be ahead because that would attract a bunch of shortterm shareholders that drive up the price so high that make me uncomfortable of remain as a shareholder of companies that I love. I don’t want the prices to stay lower than its fundamentals for too long either. I just want their stock prices to stay about at the fundamentals.
The companies that I own are fundamentally strong and I am not too worried; their balance sheets are amazing, they make tones of cash flows and high portion of their business are owned by owner-operators that are amazing at allocating capitals.
I have always made significantly higher returns immediately after market downturns or corrections ever since I started investing.
That happened in early 2016 and during Brexit.
Stay the course if you own solid companies and think this correction as a buying opportunity.
I am not going to lie. Checking your balance may hurt your feelings especially when your portfolio balance is in many hundreds of thousands. (e.g. if yours is $500,000 then last several days, you would have lost $50,000 or so…) but think about the big picture. You will be better off if you are a long term investor. Pulling out now may be a good idea if you are good at timing the markets but I am pretty bad at it so I would have to stick to it. I already lost 5-6% anyways during last several days of selloff. 🙂
Good luck to all my readers in this opportune time and happy hunting!