For the past two weeks, have you been cutting your losses in the stock market or you are preparing to cut losses soon and then stay sideline to wait for clearer confirmation of rebounding to re-enter. I am not sure how many of us are that technically savvy and seasoned enough now to spot that clear market reversal signal.
What looks like a Rebound may actually be a Dead Cat Bounce too.
In a full blown Bearish market, there will be several instances of Dead Cat bounces.
Classic textbooks advice that you should cut your losses fast and live to fight another day. Paper losses are real and they may cause you opportunity cost in the stock market.
But, how sound are these classic advices?
Actually, it will depend who are you in the stock market and your stocks pick strategy. By locking in those negative returns through cutting losses and thinking that you can get back in time for stock recovery. But, when you have missed it and coming back to the stock market too late. It may create bad outcomes in your investment portfolio recovery.
Who are you in the stock market and your stocks pick?
- Do you have a long-term investing goals?
- You DO NOT need to withdraw significant amount from your current investment portfolio in the next 2-3 years to meet some big expenses?
- Does your stocks still expected to pay you decent dividend yield of at least 3-4% in coming 2-3 years?
- Does your stocks have past history of staging strong stock price recovery in the bull market?
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