Surviving bad markets

In Money cents by Donna Willan

Did I survive Black Monday? I initially panicked, then turned to Just One Lap and followed Simon’s advice on the below Periscope. So I did nothing.

As he pointed out, I am certainly not a trader who plays the markets. I invest a little bit for the distant future and I don’t actively manage my portfolio. So I thought that if Simon was right and 24 August was just a blip then I am OK. I don’t need to be buying or selling this week or month, so I sat tight and watched people get upset – and I tried to focus on other things.

I must admit the hysteria was a bit catchy. People kept talking about how we should all be ‘doing something’. Of course in a situation like this it’s really hard to know whether sitting tight is the right thing to do, or whether we should be acting decisively. So I sat tight, did nothing and waited – with a small amount of trepidation.

The good news is that following Simon’s advice was probably the right strategy –a month later it seems that Black Monday was not actually another Black Monday at all, it was just another bad day and we survived. Phew, that’s a relief! It seems inaction was the right action!

So I think the lesson was: if we are just simple investors, and not active traders, then we should always remember to sit tight during market lows – it will all be OK in the long run.

In my next column I will reflect on what to do when we receive a small amount of unexpected cash. I received a small but very nice leave payout when I left my last job – what shall I do with it?


The link to an investor’s most important chart is here.

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