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大跌之际,聪明的投资者接下来会怎么做?

What will smart investors do next during the big drop?

Futu News ·  Jul 25 12:22

After the collective plunge of technology stocks led by the "seven giants" of the US stock market last night, Asia's stock markets have also suffered a round of bloodshed today.

The market is ruthless and cold. Investors work silently in their own fields in this cold world, so how do smart investors live vigorously in the cold capital market?

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The best learning material is the masters who have survived in the market for a long time, as they possess greater resilience relative to the market.

In the face of volatile stock market, according to stock god Buffett, the best approach for investors is to remain calm and stick to long-term investment principles.

Buffett, who is already 90 years old, has experienced ups and downs. In a 2016 interview, he warned investors: "When the stock market falls, don't pay close attention to the market performance. If an investor is worried about a market decline and then plans to sell the stocks in his or her hands when the market rebounds, then such an investor will not achieve the desired returns."

Buffett's repeated maxim is: when you have found the right stock, hold onto it.

Ironically, Graham's fund, which was managed by his teacher, suffered losses of up to 78% during the 1929-1932 financial crisis, leaving him nearly bankrupt. After experiencing these hardships, Graham made a comeback, writing the investment Bible, "Security Analysis," and "The Intelligent Investor."

Based on his painful experience, the master Graham summed up an eternal principle for value investing: the margin of safety.

In addition to the value investing camp, the investment master of the asset allocation type, and founder of Bridgewater Associates, which manages assets of up to 150 billion US dollars, Dalio, tells us: "When investors face a stock market decline, they needn't panic, but should remain calm. Investors tend to make selling decisions when the market falls, but giving in to fear is not a wise strategy, because it will not lead to success. Conversely, when the market falls, investors need to take the opposite approach, that is, when you no longer feel fear, you may need to sell; when you feel fear, you may need to buy."

Master Dalio tells us with a more macroscopic perspective: when the market panics, we must remain calm.

Where do we go from here?

The masters may have endless ammunition (funds) to constantly increase their positions, but what should we do?

The market has repeatedly shown us that wise people always focus on the solid fundamentals amid all sorts of fluctuations, while frivolous people follow their feelings, react emotionally, rush to seize on hot items, and abandon them as soon as they cool off.

So, if the fundamentals are not deteriorating:

  • First, don't sell your stocks cheaply in panic. If you sell your stocks desperately in a stock market crash, the selling price is likely to be very low. The market in October 1987 was terrifying, but there was no need to sell your stocks on the first or second day. By November of that year, the stock market began to steadily rise. By June 1988, the market had rebounded by more than 400 points, which means an increase of over 23%.

  • Secondly, there must be firm courage to hold good company stocks.

  • Thirdly, you must dare to buy good company stocks at a low price. A stock market crash is the best opportunity to make big money: huge wealth is often only available in such stock market crashes.

In the era of high volatility, although we don't know where humanity is headed, we believe that humanity will always move forward, and that investing in equity is to believe that humanity will move forward. In the long run, the trend remains unchanged. "Good industry models and good management teams" have pricing power, and the regional currency influence can cause even good assets to break through their positions in the face of short-term market crashes and disintegrate.

Slowly buy stocks of 'good companies at good prices', but never use leverage.

Editor/Somer

The translation is provided by third-party software.


The above content is for informational or educational purposes only and does not constitute any investment advice related to Futu. Although we strive to ensure the truthfulness, accuracy, and originality of all such content, we cannot guarantee it.
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