Sometimes when the stock market goes down, the value of the portfolio decreases. In this condition, controlling the emotions is important as one wrong step can convert the temporary loss to the permanent loss. This is the time when the investor should take the advice of his financial expert. With his experience and knowledge, he can deal with the situation and minimize the loss. Below are the three solutions to avoid the mistakes in the market:
The value of tolerance: Nobody forgets his first experience of Investing in the market. This becomes even more special when the Investor has to face loss or the market goes down. Due to this a lot of Investors quits the Investing procedure as they don’t know what their limit is. Therefore it is advised that they should use stock market simulators. Through these simulators, an investor can invest the virtual cash. This way he can experience the real shocks of the market without losing the real money.
Be prepared for the best and worst: Before investing, the investor’s mind should be clear about the working of the market. He should understand the value of the stock he is investing in and what can be the outcome. Having a plan can make decision making easy in a difficult time. According to that plan, an investor can decide that if he has to sell or buy more.
Try to diversify as it is the best tip of experts: Well, the dealing methodology of the financial experts is very simple. They just don’t panic at that moment. They have experience of what to pursue, how to pursue. It is important for an investor to understand the risk tolerance. Not all investors are able to invest in the volatile market. Panic selling and panic buying cause losses. At this time, the investor should go with the plan created before. Applying the process of diversification can help a lot here. In diversification, an investor diversifies his Investments. Let us understand this with the help of an example:
Suppose an investor has invested in the stocks of an airline, due to internal policies or politics the company has faced a huge loss. Due to this the reputation of the airline decreases which is also reflected in the stock market. Now as the value of the stock decreases, the net value of the investor’s portfolio also decreases. Now he has two options to either hold the stocks or to sell them and face the loss. Here the loss can be minimised or even converted into profit with the diversification. Let us see how:
Here instead of investing in the stock of a single airline, he should invest in stocks of multiple airline or multiple channels. Now suppose there is a dip in the market value of an airline. The value of its stocks decreases. But due to this, the business of all the other airlines is also going to increase. This results in the increment in stocks of other airlines. This way the loss in previous stocks is managed by the profit of other stocks.
The experience of a financial expert:
James Ian Gillingham is a Singapore based expert in the field of Investment. He has worked with a lot of financial institutions like International asset management. James Gillingham Singapore is known for his determination and passion for Investing. In his workshops, he reveals insights on how to invest in the competitive market. He also discusses the current scenarios of the market and how to deal with them. His workshops where he reveals proven strategies and valuable tips are attended by the newcomers and industrial experts.