I have seen a lot of advice being thrown around to hold or convert shares to cash in this market. I believe the exact opposite approach should be taken for new/novice investors. The reason being investing in stock is more than just valuation of a company. To be successful, you have to develop a stomach to hold on to your stocks while they are taking a hit even when it is down 40-50%.
Buffett said:
"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with a 130 IQ. Rationality is essential [...] What you do need is emotional stability,"
In Peter Lynch words:
"Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and stock mutual funds altogether."
This is an opportune time to experience just that for new investors. You can't build that stomach or emotional stability by standing on the sidelines. Look for a blue chip which has taken some serious hit like Apple, acquire a small position (with money you do not need in the near term) and enjoy the ride. Whatever you do, do not sell!
I believe once you have live through a roller coaster ride like this and feel vindicated when the market recovers, you may have very well acquire an important behavioral trait to be successful in investing.
Submitted January 09, 2019 at 01:57PM by jzanick01 http://bit.ly/2VFxGoD
