With the stock market going down so much over the last couple of years, many people have become gun-shy about buying stocks. This is understandable since most every stock had done nothing but go down for so long. However, there is signs of life and the market has moved back up somewhat.
At times like these it is hard to buy back into the market because of fear but we all know that at some point we need to get back in. Choosing that reentry point is what will ultimately separate the winners from the losers. The people who have the nerve to get back in when prices are low are the ones that will ultimately come out winners.
When you buy more stock at lower prices than you already own some shares, it is called averaging down. For instance, if you own 100 shares of ABC corp. at $100 a share and then you buy 100 more shares at $50 after it has gone down, you will now own 200 shares at an average price of $75.00. You will have averaged down the price of your shares. This is what we will all be doing when we buy back into the market.
Any expert in the stock market will preach about the importance of stock diversification when you do get back in. What that entails is spreading your bets around on a variety of stocks rather than putting all your eggs in one basket. This is important because you want to protect yourself from picking one really bad stock and then losing most or even all of your money.
If this terrible market environment we have had now though, even those who were properly diversified have lost. Nothing can protect you from losing when the market goes down as much as it has and that is something you must be aware of and accept. Investing in stocks is risky and you should never invest money that you cannot afford to lose. Shortly though, it will be time to get back in the market and those that have strong stomachs will be the ones who stand to profit. - 29970
At times like these it is hard to buy back into the market because of fear but we all know that at some point we need to get back in. Choosing that reentry point is what will ultimately separate the winners from the losers. The people who have the nerve to get back in when prices are low are the ones that will ultimately come out winners.
When you buy more stock at lower prices than you already own some shares, it is called averaging down. For instance, if you own 100 shares of ABC corp. at $100 a share and then you buy 100 more shares at $50 after it has gone down, you will now own 200 shares at an average price of $75.00. You will have averaged down the price of your shares. This is what we will all be doing when we buy back into the market.
Any expert in the stock market will preach about the importance of stock diversification when you do get back in. What that entails is spreading your bets around on a variety of stocks rather than putting all your eggs in one basket. This is important because you want to protect yourself from picking one really bad stock and then losing most or even all of your money.
If this terrible market environment we have had now though, even those who were properly diversified have lost. Nothing can protect you from losing when the market goes down as much as it has and that is something you must be aware of and accept. Investing in stocks is risky and you should never invest money that you cannot afford to lose. Shortly though, it will be time to get back in the market and those that have strong stomachs will be the ones who stand to profit. - 29970
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