Update: have been rolling with punches as tech stocks and crypto have been smashed. Losses have spilled over into other assets as well, but not as severely.
Rule #1 in gut-wrenching sell-offs: don’t make emotional decisions.
The emotional decision is to tap out to stop the losses piling up.
That’s not a smart decision though, generally speaking. If you were happy to hold an asset, why would you sell it at a 40%/50/60/70/80% lower price? Unless something has fundamentally changed, the asset has become more attractive, not less.
We can say a lot about the current market ructions, and there’s no shortage of worries – Central Banks going ‘psycho’ mode with interest rate hikes be a prominent one.
Yet, on a longer term perspective, sell-offs are generally great buying opportunities.
I remember my first bad market sell-off I went through (the GFC in 2008), a friend’s father told me to buy quality companies and gut it out, ‘the BHPs of the world will always be there’. Sadly, he passed away a few years after this, but his words stayed with me. And BHP is still indeed here.
Buy quality assets at good prices and try and block out the noise.