5 Tips on Staying Positive when Investing Gets Negative

Don't Lose Your Head when the Market Looks Dead

Let’s face it: the stock market’s been shaky and bearish, and no one likes seeing their portfolio go down. And there’s such a thing as cutting one’s losses. But don’t panic and do something foolish over a market setback that turns out to be temporary; you could be throwing the baby out with the bathwater. Here’s a few ways to calm your head and stay positive when the seas of investing get rocky.

(1) Look around.

Is it just your portfolio that’s doing badly, or is the market down in general? Check the S & P 500. Check the NASDAQ index or the NYSE stats or other general stock market indicators and see if we're in a decline, a recession or worse. Heck, look in on your friends’ portfolios if your fellow investors are comfortable speaking frankly about money. If your portfolio was the only one to take a dive, maybe you’ve got some losers on your hands to unload; some securities are assets in name but liabilities in practice. But if things are bad for everyone, and you’re all in the same boat, you probably aren’t going to do much better outside the boat.

A financial advisor will be happy to discuss market conditions; chances are they’ve got other clients asking the same questions. Or check out financial magazines, Web sites and TV shows to get the perspective of intelligent, well-read people. The market’s a strange beast to predict, and no one has all the answers, but people can tell a dip from an impending crash.

(2) Look to history.

Buy-and-hold investing works because in general, the market averages about 10% return every year. You’ve read it before, but if you’ve never actually sat down and crunched the numbers, go do it; it might make you feel better. Remember, if you’d bought assets before the Great Depression and held them throughout that calamity, you’d have emerged all right in the end. And things aren’t even that bad; you don’t see any breadlines out there, do you? Patient investors are smart investors. You only officially lose money on the day you decide to sell.