I wanted to offer something which might be helpful to some of you because a lot of people are freaking out about the stock market right now. But there is opportunity no matter what happens in the stock market. One of the worst things you can be as an investor is an emotional investor. So, try to get your emotions out of it and execute with a sense of discipline. Here’s a disciplined investing approach you can try which I’ve used which might be helpful:

• Case #1: If a majority of your investment account is invested in the stock market, ask yourself, based on where the overall stock market is right now (e.g., the S&P 500 Index is what I frequently use), what is the probability of the next 10%+ move in the stock market being down? If you assign a 15% probability of this happening (which means you think there’s an 85% probability of the stock market going up by this much), then adjust your investment account such that 15% of it is in cash (or other low risk alternatives).

• Case #2: If a majority of your investment account has been cashed out, ask yourself the opposite: based on where the overall stock market is right now (e.g., the S&P 500 Index), what is the probability of the next 10%+ move in the stock market being up? If you assign a 20% probability of this happening (which means you think there’s an 80% probability of the stock market going down by this much), then adjust your investment account such that 20% is invested (and 80% remains in cash or other low risk alternatives).  You can invest in individual stocks, index funds, and other stock alternatives. Index funds tend to move with the market indexes they track while individual stocks tend to exaggerate the moves higher or lower by the market indexes.  

• Case #3: If your investment account is only 50% invested in the stock market, then ask yourself: based on where the overall stock market is right now (e.g., the S&P 500 Index), is it more likely for the next 10%+ move in the stock market to be up (Case #2 above) or down (Case #1 above)? You would then assign a probability and make adjustments to your investment account accordingly as shown above.  

It’s not easy assigning probabilities (and being right), so many people might be tempted to just stay put. However, you should at least be mindful of the appropriate risk you should be taking given where you are today. If you are a long way from reaching your  financial goal, then a majority of your investment account should be invested in the stock market for much of the time (Case #1 above). If you are close to reaching your  financial goal, then a majority of your investment account should be cashed out or invested in low risk alternatives for much of the time (Case #2 above).

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

#stocks #investing #stockmarket #success