Are stock prices coming down but do we know what we are doing?

There has been talk about how a stock market crash is much overdue for some time now.

What do I think?

Well, I can tell you that the stock market will crash sometime in the future.

What I cannot tell you is when it would exactly happen.

Brilliant, isn't it?

Cannot go wrong with saying something like this.






I always say that we cannot predict when Mr. Market might go into a depression but we can most certainly prepare for it.

Think war chest.

Always have some money put aside in case opportunity knocks.

We don't have to be in a hurry to put all our money to work.

If there is nothing worth investing in, just sit on cash.

I certainly do not have any trouble sitting on cash and collecting dividends.

In fact, I rather like it.

See:
Revisiting AK's strategy with Charlie Munger.






1. If we own stocks of good businesses that are able to generate meaningful income for us

and

2. if we did not use borrowed funds or use funds which we might need for other purposes to do so,

why do we have to worry about stock prices going down?

In fact, we should be happy because we would be able to buy more stocks and have a larger share of these businesses if prices go down.

As investors, we really don't have to look at prices every single day.

If we are speculators, that is a different thing.







So, if we find ourselves worrying about price movements, ask ourselves if we are investors or speculators?

It is a world of difference.

People do frequently get so confused.

The worst thing that can happen, in my opinion, is when speculators think that they are investors.

There is nothing wrong with speculating but we have to know that we are speculating.

Don't know what I mean?

For example, see:
Investing or speculating in real estate?






Now, what about being an investor or a trader?

Well, we can do both.

We can have some trading positions and some investments at the same time.

Indeed, I can be investing in a stock and trading it at the same time.

Remember trading around a core position?

See:
Trading around a core position.

So, should we worry about stock prices coming down?

Well, we should really be asking if we know what we are doing?

"If you worry about corrections, you shouldn't own stocks." Warren Buffett

Watch the video:






Related posts:
1. Ready to come out on top? Part 1.
2. Ready to come out on top? Part 2.
3. Lost life savings and now in debt.
4. My final word on Bitcoin.