From the fall to the opportunity: the four keys to invest without panic

From the fall to the opportunity: the four keys to invest without panic

Investing in the long -term financial market implies that we will necessarily have good and bad times due to market volatility. However, How much markets are dyed red and fear dominates the headlines, many react impulsively selling. Nevertheless, The history of markets and theoretical evidence shows that these moments, far from being withdrawal signs, can be unique opportunities for those who have long -term patience and vision. It is important to clarify that what is shared below points to those investors who prefer to bet in the long term to the market instead of particular shares, such as the S&P500 or the Vanguard stock index (among others).

Among the great financial minds in the market, differences can be found, but also similarities when facing stock market falls. For those long -term investors, these “pillars” or coincidences of many of the great financial analysts can be useful. The objective is to understand that the fall in the bag is part of the process and that it is a challenge to internalize and manage fear.

When a low price in the supermarket, we run to take advantage of the offer. But the opposite occurs in the financial market: Many sell just when the actions are “cheap.” This emotional contradiction plays us against. “Cold logic tells us that we have the opportunity to buy cheaper something sooner or later will rise again”. That logic can be difficult to sustain at the time, but it is key to capitalizing on the rebound when it arrives.

  • Pilar N ° 2: We cannot escape market falls

Accept that there will be crisis is part of the game. They cannot be avoided and is very difficult (if not impossible) to avoid them. According to William Berstenin, “We will have to live one, perhaps two strong falls in thirty years of investment.” Statistics show that within 30 years, only 5-10% of financial investors achieve better yields to the market. This means that even the most experts can escape the falls. Therefore, if our investment strategy is in the long term, the healthiest and most intelligent is to know in advance, it helps emotionally shield us.

  • Pilar N ° 3: rely on financial theoretical truths

The great minds of finance also suffer anxiety during the bearish markets. John Bogle, founder of Vanguard, confessed that he felt “fatal” when the market fell, but that he reread its own books to remember why keep investing. “That is the key: do not make decisions in the heat of the moment, but to return to the plan drawn and trust the theory that sustains the long -term strategy”Sustains the author. In other words, understanding that the most specialized financial experts also suffer bass markets. Again, it is part of the process.

  • Pilar N ° 4: The best days come later

Perhaps the most powerful warning is this: if you leave the market in fear times, you miss the best days. And the most incredible thing is that many of those days with extraordinary increases occur fair during crises. Between 2002 and 2022, seven of the ten best days on the market occurred when the S&P 500 still fell. The perfect timing does not exist. This means that Getting out of the market is expensive. On the contrary, staying is profitable.

In short, investing is not just about knowing numbers, but about handling emotions. The biggest challenge is not to choose the right action, but not to be dominated by fear of stock market falls. When the market is at its worst, there are no doubt that we will feel in the darkest night. But our theoretical truths say that sooner or later the most brilliant day will come with the best days of the market (Pilar N ° 4). It is important not to miss those days.

* Economic and financial analyst.

Source: Ambito

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