Most of you have heard the story about Chicken Little. The chicken that had an apple fall on his head, and went running to the farmer yelling “the sky is falling, the sky is falling”! The farmer explained it was just an apple. When the investor runs to the stock broker yelling the stocks are falling what should I do? They might just explain that the stocks are ‘on sale’.
When the price of cars goes down, or gas, TVs, computers, appliances, tools, etc… does everybody panic and start to worry if they will ever go back up? No, they call it ‘a sale’. Then why do they have such a fit when stocks go down a little?
If you have done your research, and you know that you have a strong stock. The charts show how they go up and down. You made a decision and commitment to hold it for the long haul, and you either set a fair stop limit, or the stock is so strong you feel you don’t need one.
The dividends are either set to reinvest, or you are allowing them to accumulate in your account. Now is the time when you need to decide if you’re going to buy more of a stock you already own, or wait until you think the stock you own is going to get cheaper. Another option is to invest those accumulated dividends into a different dividend paying stock, and diversify your account.
If you think the stock may go even lower, buy some and leave some money in case it does go lower.
Keep in mind, you’re going to own the stocks for the long haul. The objective is to have as many shares as possible to get the dividends. So when they get cheaper, that’s an opportunity to get more for your money. Don’t be a Chicken Little and panic.
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