Stock Investors: Are you panicking? Should you be?

Oh, no! The stock prices keep falling!

Oh my gosh! What do we do now?

A lot of people start panicking. These people are the same people that only saw good things coming when the market was going upward. Now that the market is sliding, many of these same people can only see doom.

These people are REACTING--NOT PLANNING.

Are they wrong? They might be right, but I suggest taking a couple of steps. (Panicking is NOT one of them!)


1. We need to investigate.

Is there a good reason the stock price is dropping? Has anything about the company changed since it went down?

If it has, can you live with this reason? If not, then sell.

If you can live with the difference or there isn't any difference at all--except the lower price, then DO NOTHING! Just keep holding you stock, unless it's near the end of the year, and you need to find a way to reduce your taxes (by taking a "loss for now").

2. We might want to buy more.

If we like the company, still, this is an awesome opportunity.

This is like going to the store to buy a box of your favorite cookies that usually are too expensive for you to feel good about buying them. On this particular trip, however, you see that the store has a sale that when you buy one box, you get 2 more for free.

Assuming that the cookies won't go bad anytime soon, how many would you buy then?

I know that I would buy as many as I could, especially if I thought that I might be able to resell them at a price that is lower than usual but higher than I paid to get them.

Stocks really aren't any different. When they're cheap, that's when you WANT to buy them.

I admit that it hurts to own something and watch the value dip, even when you're pretty sure that it's temporary.

So should you panic?

Investigate first. If the coast is clear, buy some more.