Everything is going good at the moment... But knowing your history should make you prepared for the next market crisis that will eventually come.
When you are following the plan that I do, i.e. buying into a few companies and then increasing that buy in each month with the goal to build my own money making machine it will be hard to see market value disappear.
Since 2014 when I started investing in this way, the markets have grown stronger and stronger and I've not yet experienced the fall. How do you prepare for losing a lot of the market value that you have built up?
By not caring and sticking to the plan.
Yes, you lost a lot of market value but hopefully the companies that you invested in will still be there (you didn't invest in the hottest thing at the moment didn't you? instead look for long term survivors)
If your portfolio lost 80% of market value over night that also means that all company shares are 80% cheaper to buy. If there is long term revenue streams in the companies you invest in, then you should not really care about the markets valuation of the share price... Instead you should do the math yourself, if you see yourself holding the shares for 10 years or longer then chances are that the bear market will end and a new bull market will start.
If a disaster doesn't hit you during the fall (like losing your job and hence your investment power) you should continue to buy when the markets go down, maybe even consider increasing the investing power by selling stuff that you do not need anymore. This way, you may actually grow stronger when the markets are at the lowest and reap the rewards when the markets start to rise again.
There is no such thing as market timing, so do not try that.. Instead just buy each month and look at a falling market and red numbers as companies being on sale, and you could make a bargain!
So, if you have done so already. It is time for you to device a plan of your own on how to handle the next financial cycle of the world markets!
Until next time: Challenge yourself to do something new
Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.
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