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Due to the recent rapid decline in the global stock market, many investors have suffered severe losses in the books they hold.
How much money has been lost? What should I do now? Should the stock be sold immediately? Or wait for it to rebound before selling? I usually ask him, why would you buy stocks? Why do you still hold stocks? Sometimes they will tell me very frankly, because after listening to XX masters, XX experts, XX financial performances, or a friend, a relative, or a neighbor telling them, the stock price is very cheap now, so fast Click to buy, or after the stock has fallen for some time, these people will say that the current stock price is cheaper, and it should be evened down, and it will go up no matter what.
If you are holding a lot of stocks in the stock market disaster because of this, you have already suffered heavy losses at this moment. I hope this is the last time you are recruited in the stock market. First, let's look at a practical example. This stock is the performance of Citibank's financial tsunami in 2008. Citibank is considered an international company and is very stable in the eyes of many people. When the stock price falls, you can buy it at a cheaper price. Shouldn't you buy more high-quality assets?
Or it should be okay to buy it when the stock price plummets because big companies will never fail. In the 2008 bear market, you should hear these words often, and it is on TV or in the mouth of so-called experts. Isn't it very similar to those who persuaded you to buy at the time, and the people you currently hold stocks say? But if you look at its stock price for the year, in May 2007, Citibank still had $ 460 ~ 470 (Editor's note: the stock price was adjusted by joint-stock).
But by the beginning of 2008, there was only more than $ 200 left. When it fell so much, you can buy it if it was cheaper. It can still fall by another 50%, and by October 2008, only $ 110 is left. Then I ask you, assuming that you are not buying Citibank at the highest position of $ 470. I assume that you only bought at $ 250 when it fell a lot. Now it falls to $ 110 at this moment. You ca n’t sell it. Stocks?
Why ask you this question, because this question is exactly what you are tangling now. When a person buys a stock and then falls sharply, the entanglement in his heart is that if I sell it, it will rebound afterward. Am I not stupid? Am I going to lose? Will you look at the situation again, maybe it will rise later, at this time in your head, there will be a lot of expectations, expectations, fantasies, and assumptions. Because you do n’t want to admit your mistakes, so at this time you will start to ask other people ’s opinions, what should you do now, just as if you came to ask me today, the reason behind it is that you do n’t want to take responsibility, you want to Give this decision-making responsibility to others. For example, if I ask you to sell the stock at this moment when it rebounds later, you know you can put this responsibility on others. For example, push it on me, but please wait. Isn't that the same reason you bought Citi for $ 250? Why did you buy it at this time, not because you listened to some people, master XX, expert XX, relatives and friends, neighbors next door?
So the first thing I hope you will learn is that every decision to buy and sell on investment must be fully responsible. Otherwise, you will never make progress in investing in this path, and you will not get a real lesson. When you learn this lesson is when you make a decision yourself and are willing to admit your mistakes. Instead of implementing this decision based on anyone's views and opinions. Let's take a look at Citibank. If you don't estimate $ 110, what will be the result? The stock price rebounded slightly afterward, but it has been falling since then, and it fell to $ 8.89 at the lowest time.
Let ’s go back to the moment when you were asked to decide for $ 110. If at this moment I tell you that you should stop and leave, and it will bounce back shortly afterward, what will you think at this moment, you will tell yourself, or yourself Yes, I should stay longer and I should continue to hold, but at that moment, you will not know what will happen after the stock price, if this is the so-called lesson you learned, then you are miserable. Because you will think that your opinion is right all your life, the next time you encounter a stock similar to Citibank, you will make the same decision in the same position, you will continue to hold it, and hope it will be later Rebound.
The second scenario is that assuming that it is all up to you to make your own decision in the end, and you feel that you have fallen so much anyway, it is better to look at it and wait. The result rebounded. Will you sell after the rebound? Don't forget that your buying price is $ 250. After rebounding, you still haven't returned to your original position. At this time, you will feel right. Because you have just made a decision, it will rebound after a long time, so you will not sell this stock when it rebounds. You may even add more. If this is the case, the end will be very tragic, because at that moment you don't even know if the stock will continue to rise or continue to fall.
Well, in the end, this stock of Citibank tells you that even in a bear market, even if any stock falls 90%, it can fall another 80%. Citibank is a good example. It fell 9 from $ 470. If it reaches $ 40, it can also drop another 80% to $ 8.89. At that time, some large insurance companies such as AIG, which many people did not expect to fail, can also disappear in the 2008 bear market. So in a bear market, any stock has a chance to become worthless, and even today, more than ten years later, Citibank is only a few $ 30. So the next point I want to bring out is that in a bear market, do n’t underestimate the decline in stocks. If in a bear market, you are holding a stock with a very large decline, it has a great chance to continue to fall afterward.
Any 20% decline begins with a 5% decline.
Any 50% decline begins with a 20% decline.
Any 90% decline begins with a 50% decline.
So you simply don't know where in the bear market, if your stock keeps falling, it will fall. And if you have been holding it, you are constantly consuming your purchasing power, so that you lose a lot of opportunity costs to capture some stocks that can help you turn over. On the contrary, if you admit mistakes early, retaining your fighting power is your purchasing power. Instead, you can be calmer, turn back to reason and watch the changes, and discover some stocks that can make you bottom out. Among the methods,
Finally, I will give you two examples. If you admit mistakes early in the bear market and retain your fighting power and purchasing power, how can your results be rewritten?
Let's look at the bear market in 2008 again. If you admit your mistake at Citibank at $ 110 and stop the loss, you can fall to $ 8.89 again after avoiding it. In other words, you have saved 90% of your funds, even if you still lose -50% on your books at this moment, because if you do n’t stop losses, your biggest loss is more than -90%, and in the end, almost nothing is left. If you save your purchasing power and find this stock, basically you can make a big profit. This is Netflix's stock, you can look at its bear market in 2008, it bottomed out earlier than the S & P500. By November 20, 2008, a small wave and a high wave have been achieved. When the market bottomed out, probably in March 2009, it has risen to a very high position.
In other words, it conforms to the characteristics of super-strong stocks, it is a market leader, I only buy when you are in this position. Because there was already a strong buying signal at that time, it completely deviated from the trend of the market, the market is still a wave below the wave to find the bottom, and it is already a wave above the wave to continue to find the top, probably in this position time. There is also a breakthrough in VCP, and then it started a wave. Take a look at where it rose afterward, and the maximum rose to about $ 40. In other words, if you buy at the position of $ 5 and rise to $ 40, you can earn 8 times. Even if you lose -50% on the book at the moment of buying, in 2011, two years later, you have already made 4 times.
Compared to if you continue to hold Citibank if you do not stop at all, when it drops to $ 8, basically all your funds are gone. Later, even if it goes back to $ 30, you still lose more than 80%, so what I want to bring out is, do n’t forget the opportunity cost. If you continue to hold Citibank, your opportunity cost will be 4 times the return. Plus your 80% loss at Citibank.
Let ’s take a look at the last example again. This is the burst of science and technology stocks in 2000. The bear market decline was also amazing, and the time of the entire bear market was very long. This is the S & P 500 index. During the bear market, it continued to wave. It falls below a wave, and there is a stock that is already rising above a wave. This is eBay. The first thing I must emphasize is that any strong leadership stocks still have a chance to fall in the early stages of the bear market. And some strong leadership stocks will not show their super-strong performance until the middle or end of the bear market, so what I want to bring out is that it is best not to hold any stocks in the bear market until you find some super strong stocks.
The future of supernova stocks is born. In this example, you will see that the stock is making a bottom. During 02-03, the stock of eBay has started a new upsurge. Assume that you are in this upsurge. One time to buy, you can see how much these supernovas will give you after the bear market ends. By 2004, EBAY had reached $ 24. Even if you buy in $ 8-9 in 2003, after more than a year, you will have a 2-3 times return, which can make up for the mistakes you made in the bear market, but the premise is that you must recognize the mistakes early and retain your purchasing power. , Until you find the supernova stock, otherwise your purchasing power will be consumed completely, you just ca n’t turn over.
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