5 Things to Do When a Stock You’ve Invested in Crashes

Putting money into the stock market is a thrill. Because the potential for profits is exciting. But even though people invest in stocks with optimism, the reality is that the stock market is volatile. Stocks can go up big, but they can also come down hard. If you have the misfortune of picking a losing stock, it’s important to avoid rash decisions in the moment. Lashing out because of regret can create even more frustrating problems.

Remember, Risk Is Part of the Game:

Finance Writer Coryanne Hicks advises, “It's natural to want to avoid losses – investors feel the pain of loss more acutely than the pleasure of a gain. The best way to recover after losing money in the stock market is to invest again. Don't stick your head in the sand and put your money under the mattress because you'll never recover that way.” Here are a few quick tips on how to survive losses in the stock market:

1.  Take A Deep Breath:

The absolute worst time to panic is when things don’t go your way in the markets. Moments of difficulty are exactly when you should activate logic and concentration.

2.  Investigate the Root Cause:

Before losing your mind over apparent losses, find out what exactly triggered the situation. Sometimes stocks can mistakenly go down due to indirect pressure from unrelated events. In which case, unrealized losses could be temporary.

3.  Analyze the Impact of Your Loss Before Reacting:

How deep in the red has the situation actually put you? If the answer is only mildly, there’s no need to despair. Losses are only devastating if it takes months or years to recover from them.

4.  Choose a Wise Exit Strategy:

If you have to sell in order to cut your losses, do it in the most strategic way possible. Sometimes stocks are capable of rebounding from extreme sell-offs. Which creates future opportunities to minimize the damage.

5.  Reflect on What You Could Have Done Better:

Painful experiences in the stock market aren’t a punishment. They’re learning opportunities. Did you lose money because you weren’t diversified? Did you lose money because you didn’t really do the homework? Do some soul searching so that you can learn from your mistakes.

Conclusion:

Investing might be a lucrative way to make money, but nobody ever said it was easy. Thorough research is the only way to protect yourself against negligent losses in the stock market. Before ever putting money into an individual stock, make sure you understand what the company does and whether the overall economy is conducive for their business model. If you like what you just read from our blog, you’ll love the various informative courses, workshops, and events listed on our websites and social media. Whether you’re interested in personal development, health and wellness, bettering your relationships, or the overall improvement of your business, give us a call at 1 (800) 913-0222 to find out how Richard Martinez can help you break past your daily struggles and start soaring in success.