You Do Not Have to Move

【You Do Not Have to Move】CLEC Investment Club Written date: May 22, 2019

Monthly dollar-cost-average investors must not stop deductions during a market decline, no matter what.

Some long-term investors can ignore the market and simply hold steadily no matter what happens over the next two years.

But to help everyone see through the possible situations over the next two years, only possible, not certain, let us first take everyone into a time tunnel and look at the future.

If the market is a bubble bear market, the future market will keep falling, dropping 50%, which is only possible and not certain. Investment holdings and dollar-cost-average positions will lose 50% or more. But you must be able to accept and face it. To be able to see through this decline, you must first learn to face terrifying market conditions. When the terror really comes, you will not do something foolish and sell at the lowest point.

When the market returns to today's level, assets will double, because dollar-cost averaging will make a lot of money by buying cheap stocks on the way down.

Ordinary people all say at first that there is no problem, but when assets really fall by 50%, even if they do not sell at the low, it is still very painful psychologically.

Another choice is to sell stocks and funds, put the money into short-term U.S. dollar money market or cash, and if a bear market really comes, the psychological pressure during the decline will not exceed what you can bear. If you buy back after the future market falls 50%, you will earn even more. Of course, if the market does not fall and instead rises, the situation is different. This is the risk of making a trading mistake. No matter what the market does, dollar-cost-average deductions must continue to buy. Market declines are best for dollar-cost averaging.

All of the above are assumptions and simulations. Understand the situation in advance, ask yourself which one best suits your personality and risk tolerance, choose one, and stick to it. Any choice will ultimately succeed. But changing halfway will create very large risk.

No matter what you choose, the one thing you absolutely must not do is become afraid and sell stocks only after the market has fallen more than 30%. This is a major market taboo. Remember it.