What is stock market disaster? The stock market disaster is a pessimistic concept in the stock market, but some people can see opportunities in the stock market disaster and get good returns from it. So what is a stock market crash? What should we do when encountering a stock market crash? Here is a brief explanation for you, and I hope it will help you.
In the process of investment, psychological construction is also very important. It is as important as our investment methods. If we master the investment methods, but do not have psychological construction, we cannot adhere to the investment methods in the investment process, then we will not get good returns in the end. As the famous saying goes, "We know a lot of things, but we still can't live a good life." We have learned the knowledge of investment and financing, and at the same time, we should also have the ability to persevere and make good use of it.
What is stock market disaster? We all know that index funds can provide a compound annual return rate of about 10% - 14% in the long run. However, there will also be fluctuations of 20% - 50% level during the period of holding index funds, because index funds are stock assets with relatively large fluctuations. If the market suffers a short-term decline in the short term, and the market's mood is extremely panic, this is a stock disaster.
The investment method of index funds is not complicated, but it is difficult to persist because many friends panic when they encounter a decline. How to avoid this panic mentality? How to face the fluctuation of index funds and survive the stock market crash safely? What impact will the stock market crash have on our investment?
The stock market crash in the United States in the 1970s“ Beautiful 50 ”Many people have suffered heavy losses. Should we not continue to invest when encountering a heavy stock market crash? Warren Buffett's view on "Beautiful 50" is that, on the contrary to stopping investment, stock market crash will bring good investment opportunities, because after the crash, there are many good cheap stocks in the market.
What impact does the stock market crash have on our investment in index funds? Generally speaking, famous stock market disasters in history, such as "Beautiful 50", Japan's stock market crash in 1989 , and Internet bubble in US stocks In such a big stock disaster, the average decline of the stock market is more than 50%. It is true that our investors will suffer from large book losses in the short term, but this impact will not make index funds suffer a devastating blow, because index funds have the characteristics of longevity and long-term rise. Therefore, the investment index fund will recover in the later period after encountering a stock disaster and bring good returns for the next bull market. The advantage of our investment in undervalued index funds is more obvious. When the stock disaster occurred, the stock market had risen a lot and was in a higher valuation position. However, we only invest in undervalued index funds, avoiding most of the decline, and the risk is lower.
At the later stage of the stock market crash, the valuation of the stock market is often very low, and it is easy to have many investment opportunities for undervalued index funds for us to choose. When opportunities arise, index funds with undervalued fixed investment are a good way to invest.
It is not difficult to invest in index funds, but it is not easy to control market fluctuations and stick to the simple task of investing in index funds. Every friend who can persist deserves to be rewarded by the market.
