What If I Think Stocks Will Never Fall

Why it might be a good idea to remind yourself why you're investing

Ruth Saldanha 8 March, 2021 | 10:19AM

 

 

Ruth Saldanha: If you open an account with an online brokerage right now, you can get free stocks worth thousands.

That's right. It's free, and it will grow forever because stocks never go down. And how do I know that? Because all my friends said so. So, what if I think stocks will never fall? Well, you could think that except it's not true. Stocks fall a lot.

Look at this chart. All those red marks, that's when stocks fell. The most painful was in 1929. The market fell 79% and that led to the Great Depression. If you think that's too long ago to matter, think back to the 2000 dotcom crash. Stocks fell then, many companies closed. Remember Pet.com? Well, the survivors started recovering and then got hit in the face with the Global Financial Crisis. In nine years, the market lost 54%. So, yeah, stocks fall.

There are tips to stop yourself from getting hurt though.

Samantha Lamas: Put some barriers up that force you to slow down. For example, try explaining the opposite. If the markets are going crazy and you have the urge to sell, write down at least five reasons why that would be a bad idea. This forces you to take on a different perspective. Plus, it can help remind you that you may be putting your financial goals in jeopardy.

Saldanha: Exactly. You want to retire someday, right? So, before going wild, focus on your goals and remind yourself of why you're investing in the first place.

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About Author

Ruth Saldanha

Ruth Saldanha  is Senior Editor at Morningstar.ca. Follow her on Twitter @KarishmaRuth.

 
 
 

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