When you invest in stocks, you have the good side and the bad one
When you invest in stocks, you have the good side and the bad one. The good side is obviously when you make money from your investment, and with a good strategy and a bit of luck these gains could be huge. When stocks rise, everything is fine and everyone is happy. Not only your net worth increases but your self-esteem too! You start to think hey I made the right decision with my money and I am doing better than my colleagues and family members. Unfortunately with potential gains come potential risks and losses. There is unfortunately absolutely no doubt that one day your stocks will go down and you will be (this could well be only temporary) losing money. These difficult periods and how well you manage them will define you as an investor. Nothing is easier than watching your portfolio going up but similarly it is quite hard to see your portfolio falling or even worse collapsing. These loses could very well be temporary but unfortunately sometimes they are not. If you invest at the wrong time in the wrong stocks, your losses can quickly accumulate when the markets readjust. When you witness your portfolio falling (when we say falling we mean really falling like let say more than 5%) your first reflex should be to look at how well the stock indexes perform over the same period. If you find out that the stock indexes also fell then just relax, your portfolio will certainly go back up again later on. If your portfolio is going down in value while the market is going up or is even stable then you have an issue that needs to be looked at.