The DOW, Nasdaq, and S&P all had a very tough week. One of the worst percentage drops since 2012. It is a big deal to lose all gains from a month in a single week but we are still not in a correction (normally considered a drop of 10%). The stocks were hurt from some bad earnings reports and fears that China has slowed down significantly. All things to be worried about but I'm not convinced that it is time to get out of stocks and hide your money in cash.
China announcing that they had a major slowdown could be real and especially if they are not telling the whole truth with their numbers. As if they were softening the blow a bad numbers report could bring about a sign for a downturn in the economy. Yet I always think China is inflating there numbers and they could be just adjusting numbers down to get back more in line with reality. I still think that the United States economy continues to pick u every so slightly.
Now onto the poor earnings reports, some of them were bad and some of them were above expectations. I think the companies with bad earnings reports should be looked at more closely especially if you owned them. That could be a sign of one needing to close their position or at least reevaluating it. This owning stocks sure is work having to reevaluate and constantly check in on your investments. To be a good investor and actually make money so you can retire early that is what it requires. Knowing everything and acting when it is necessary. Some of these might just be minor hiccups or unexpected expenses that occurred. One bad earnings report should not be a reason to get out of stocks completely or even one stock.
My advice is to always keep watch of changing market news but really focus on the timeframe for your investments. A person in his 20's has a timeframe of over 30 years and should realize that a small hiccup does not destroy plans. If you don't need that money tomorrow it might not be worth it to sell and pay a fee and then buy back a stock when you think it has reached its lows. Very few people get lucky in predicting lows and highs. It is better to stick with an investment that you have thoroughly vetted rather than constantly pushing your money around.
I had a cousin who when younger had some money in an investment account. Every so often her broker would call and say you have to sell this position and move to this position because it will go up more. This continued for several years and finally she was back to her original investment, doing the math she discovered that she would have been just as fine keeping her original investment. What she ended up doing was just making her broker very rich. This is one reason why I believe I can't time the market. I can get somewhat better deals but I don't buy and sell as a day trader because that is a good way to lose money.
Just remember about the last week if the stock market did go down all the way it won't matter if you have all that money in cash. Ride it out if you have picked a great company and don't need the money soon. Closer to retirement it does matter but if you are closer to retirement you really shouldn't have all your money in equities either. Young people don't panic, your investments will be fine. There are many years left to go.
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