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What to do when you lose money when investing?

What to do when you lose money when investing?

March 2020 has become unpredictable for many, and most investors (even Warren Buffett himself) have seen large losses among some of their assets. For example, Occidental Petroleum (OXY) shares fell from $ 40 per share to$ 10 per share after their acquisition Buffett. Or, for example, Delta Airlines (DAL), which fell from$ 60 to$ 20 in a couple of weeks.

Now there is a slight positive trend in the market, and gradually stocks are recovering, but no one knows for how long

What does all this mean? Even what experienced and experienced investors, and sometimes even a whole team of financiers (I do not think that only Warren Buffett makes all the decisions at Birkshire Hathaway) can make mistakes and do not know for sure whether they bought on the decline, on the bottom or on the rise.

How to overcome the feeling that you were wrong or that you could not predict the future the fall? There are three simple rules that I would like to share with you in this article.

1. Price and value are not the same

This phrase can be quite often heard in business quotes, from investor gurus, and even in the book Reasonable investor. But does everyone really understand what this idea means the phrase?

When you choose a company for your portfolio, try to look first at its performance rather than its price. Will the company be able to pass the test of time? Does it have strong competitors? Is it ahead in its industry? Does the company increase its revenue from year to year?

If all the answers are Yes, then most likely this is a very valuable company. And then you just look at the price of its shares. Are they at their peak now? If so, then do not buy the product at an inflated price. On the decline? What caused the decline? If this is just a short-term change and small problems, and you know that the company will last for more than one year, then it means that the time is right for you to get started. acquisitions.

Let me remind you that our channel is educational in nature, is not a specific recommendation, but only one of the possible options. All investments are risky.

2. Purchase of a company with an additional discount

So you've made an acquisition and added a great company to your portfolio. However, there was a crisis and prices went down (as in the examples at the beginning of the article). What should I do in this case? You bought shares for$ 40, and they are now worth $ 20. But you still know that the company is great and it will definitely cope with the difficulties and come out in a plus in a year or two.

I treat such drops as an additional discount and opportunities to buy even more shares at a good price. In order not to be unfounded, I did this with Nike's stock . I talked about why I buy them half a year ago in this article .

The average purchase price in my portfolio is 72$, the peak was above $ 100, then there was a sharp drop to $ 68 and I managed to buy additional shares of their shares at a price of $ 70 apiece, and while I did not lose, we see a recovery.
By the way, you can connect to my portfolios on Finam's Comon service. You can also track their profitability there (Yes two strategies, one from 100 000r, the second from 500 000r), wrote about this service here .

3. Feel like a company owner

The third important point. Personally, it always helps me make balanced and informed decisions. When you buy shares in a company , you become the owner bits of the business you've invested in. Yes, there are times when things don't go so smoothly, but if the company is really strong and with responsible and competent management, then in the long run it is not in danger.

And if you are not sure about the purchase, you think that the company will not survive the crisis, then it is better not to buy their shares. And if you have already purchased them, then the question is: why did you buy shares in a drowning company? =)

All the shares that I hold in my portfolio, I buy only if I am confident in the future of these companies. And, it really helps to survive periods of falls and, to tell the truth, I don't even worry about it. On the contrary, I expect discounts on some other securities.

And how do you cope with falls? Are there any methods that can help you get rid of your feelings? I'll be waiting in the comments . And also do not forget to rate the article with a like , this helps in the development of the channel. You haven't done it yet signed ? Quickly click on the button and boost your financial literacy!

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