telegraph - don't panic

{ However, the most important thing to remember to ease your panic is that history shows markets always recover over time. }

QUESTOR in the Daily Telegraph says, markets are falling, but the worst thing we can do is to panic out of stocks only to regret it later....Wise words?

http://www.telegraph.co.uk/finance/markets/questor/8631927/The-market-is-falling-but-dont-panic.html


Tuesday 12 July 2011
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Questor
The market is falling but don't panic!
Markets have seen sharp falls all week ? but the most important thing an investor must do is not to panic. If you sell in haste you may repent at leisure.

Screens may be red but there are a number of good reasons not to sell shares now.
By Garry White11:00AM BST 12 Jul 201121 Comments
One of the hardest things to do is to remove you emotions from your investment decisions ? but it is vital because emotion trumps logic. This could result in you making the wrong decision for the wrong reasons.
There are a number of good reasons not to sell. These include dealing costs and the fact that you may be crystalising a tax liability.
Paper losses are not real losses until the share is sold. Therefore it is best not to sell shares in a falling market unless you are forced to for a specific reason. Markets recover from crashes ? as we have seen over the last few years. The FTSE 100 is up about 66pc since its low of 3512 on March 3, 2009.
As a private investor, you should be taking a long term view ? that means five years or more. Indeed, markets falls should be regarded as buying opportunities. It is very difficult ? if not impossible ? to time a market top or bottom. The best strategy is to ?drip feed? into the market by being a regular buyer of shares.
If the shares are showing a loss, it may also be an opportunity to ?average down?.
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This strategy involves buying extra shares at a lower price to bring down the average price of your purchase. It means that the shares have to recover less ground to be back in profit.
As far as new investments go falls allows you to purchase what are fundamentally sound investments at a bargain price.
However, the most important thing to remember to ease your panic is that history shows markets always recover over time.
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