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How I (don’t) lost my money


How I (don’t) lost my money

And here it is. Markets again “flies” down and everyone is worried what will be. New crisis! It will never again rise! We lost a lot of money! Capital markets do not work! Everything is different! A cadaverous smell spreads all around. Who believes in this, do not read further and watch the news better on TV.

What is going on? Simply. Investors are afraid. The declining economic power of Germany, Ebola, slowing emerging economies and also FED with its policy of secrecy, what will (if I will continue to purchase large American bonds or not), does not contribute to stability. Everyone is afraid of what will be. They talk about the end of recovery and generally there is a “stupid” mood.

So now you need to use common sense.

Imagine a situation where I have purchased shares in open-end mutual fund. For example, 5,000 shares at the price of USD 2 per piece. My property is therefore 10.000USD. So was there at the beginning of September. Well, now is a full 8% smaller. Then again own 5,000 shares, but at the cost 1,84USD. So my property is 9.200USD.

But you know what is important? I still own the 5,000 shares. None of them had not prepared me. Just have temporarily lower value.

I did not go and surrendered 800USD to a mayor. And if the share price is inconvenient, do not sell it. But you know what ? I can buy. This will tend to do so that when the price is lower, so goes shopping on sale. With T-shirts its normal. He is on sale, we will buy well and it will raise the price again. Or the seller gets rid of him and replace him with some newer. It is the same as for investment. That’s why Warren Buffet says that one should invest when he has money. Dont set market. On his reward growth. Sometimes you have to wait a while, but in general it is always the case.

Well, some of the price of the fund decreases in comparison with indices less, some more. What you are looking for? Well, of course, those that fall as little as possible. You will have faster start up is a completely different position. A faster expires loss and start earning. And earn more. So whether you financial advisers say anything, look into the history and go after losses. How say “The Wolf of Wall Street”: “I do not want that peoples judge me for my successes, but for my losses, those are not much and if so, are small.” Have you seen the film?

And homework: what do you think will happen to the price of gold, diamonds, real estate, capital markets when they go down? Do you think it will grow? Maybe gold after hitting the 1.190USD / oz since September 3 grows. But it’s not overwhelming. Just this tells us that the 1.190USD / oz gold no longer wants to sell, because then it is not worth to mine. The price of diamonds on the contrary, since the end of May falls. Prices of apartments are rising. Slowly and almost without influence events in the capital markets. But the effect on housing prices up globally and roughly one year later. Commodity indices also fall by the end of June. The same happens with the price of Bitcoin, which is currently in falling trend.

And so it is. Given that the capital market and the markets in general behave the way they treat their dealers, which are people and therefore stochastic organisms (behave just as obvious), subject to the emotions of fear and greed, no one can predict anything, and nobody knows what will be. We only using very sophisticated money management to prevent large losses and maximize profits.

The lesson: Do not panic and invest. Right now. The lower the share price falls, the more you earn subsequently. But when the markets turn around and go up, so will be too late.

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