I was inspired to write this post by someone that is very close to me. She is brand new to investing and I am very proud in how far she has come in just six months. She recently asked me a question about one of the companies she owns after some negative news caused the stock to fall 8%.
Now…no one, myself included, wants to see any investment drop by 8% in a year, let alone in one day. How unsettling! I have experienced this on more than one occasion myself.
Her question was whether she should sell the shares of the company she owned to buy shares in another company. My answer to her was no. Here’s why…
The narrative, or the story behind why she invested to begin with, hasn’t changed. Stock prices are going to be volatile. Some companies’ stock will be more volatile than others’.
Take Netflix (NASDAQ:NFLX), for example. It’s not uncommon for this stock to move 10, 15 or 20% after reporting earnings. That’s just the way it trades. Netflix is not a stock for the faint of heart, but it’s been one of the best performers over the past 15 years!
I’ve heard and shared several stories regarding early investors in companies who sold too early because they were worried, or didn’t have patience. This resulted in them leaving hundreds of thousands of dollars – sometimes more – on the table. I don’t want this to be you!
Listen: investing is one of the few times in life where the best thing to do, 9 times out of 10, is nothing. You have to let things play out over time. This is hard, because it goes against human nature. We are used to reacting and doing something when we feel unpleasant. Doing nothing makes us feel nervous.
But in investing, buying, holding, and then doing nothing is the best thing to do almost all of the time. This is why investing is hard.
But it is worth it!!!
My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.
Click here to be taken to its Amazon page.
(Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)