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How to react and what to do when the stock market falls?

When stock markets fall, investors need to remember to maintain a long-term perspective and take proactive steps. Investors should focus on the fundamentals of their investments, use stop-losses to limit their losses, and refrain from panicked selling. Additionally, taking advantage of market corrections and performance rebalancing can be useful. Ultimately, following these tips can help investors to calmly handle any event that may occur in the stock market.

Another “black” Monday: how to react and what to do when the market falls.

Monday, April 9, was another day in the history of the Russian economy, which was called “black.” Following the introduction of the largest Russian companies in the US sanctions list, the stock market crashed, as a result of which even non-listed companies.

The greatest blow was inflicted on Oleg Deripaska and his Rusal, which lost 50% on the Hong Kong stock exchange during the day and about 30% on the Moscow stock exchange, and subsequently warned of a technical default. Other assets of Deripaska were also severely damaged, which is why he lost a total of 1/5 of his fortune (~ $ 1.3 billion).

The list of significantly affected companies and assets includes many that set the general background for the Russian stock market:

• Sberbank showed a decrease of 17%, although, in fact, it is not directly related to top managers and executives who were subject to sanctions.

• NMLK. Shares of the Novolipetsk Metallurgical Combine reached a decline of 8.7% from April 6 to 9, however, by April 11, they had won back and stabilized.

• Gazprom became an accomplice to the general collapse due to the inclusion in the sanctions lists of Alexei Miller, who is chairman of the board of directors of PJSC.

• Norilsk Nickel, a quarter of which is owned by UC Rusal, at the close of trading on April 9, lost 14.56%.

• The RTS Index, like the MICEX, have not experienced such a decline since 2014. At the close of trading on April 9, the Moscow Stock Exchange index fell to 2090 points (-8.34%), and the RTS – to 1094 points (-11.44%). The fall in the indices is due to the state of companies that have fallen under sanctions, because they accounted for a considerable share of the total capitalization of indices.

Of course, such changes could not affect the state of the national currency. The ruble instantly began to fall in price – the dollar and the euro “gained” 5-6 rubles each. Among the companies that suffered, being not related to the persons involved in the sanctions list, were NOVATEK (-6.74%), LUKOIL (-8.1%), Rosneft (-6.29%), Mechel (-20%) . The shares of EN + Group (-41% in London and -50% in Hong Kong) and Evraz (-18%) worsened. The main shareholder of Evraz is Roman Abramovich.

In this situation, the general panic has a much greater impact on the Russian economy and the stock market. Reports of the losses of the largest companies launched a panic, which even people far from the stock market did not stay away from. The ruble’s position does not save even the rise in oil prices. Suspicion and caution towards Russian assets are growing among investors, among ordinary people – anxiety about the euro and the reluctance to lose money set aside for holidays.

What to do when the stock market falls?

the market is falling

Why did these sanctions turn out to be so painful – because the companies for which Europe and the USA are key areas of activity were hit. Disconnecting entire sectors of the economy (energy, metallurgy, automobile industry) from the market is not only a loss for companies at the moment, but also a decrease in investment attractiveness in the future. What to do in the current circumstances when market movement is dictated by poorly predictable political decisions?

Control emotions

the market is falling

Panic is a bad ally, especially for those who invest in Russian companies. First of all, crises and landslides, both for Russia and for other countries, are not news. Now it is important to keep your head in the cold, clearly analyze the information and make informed decisions. General anxiety affects the movement of the market, but you must stay out of it.



 Buy stocks at a reduced price

the market is falling

The main principle of stock exchange earnings is to buy low, sell high. Many of the sagging companies in the long run will remain major players on the stock exchange and improve their position (in the absence of non-OTC factors such as politics).

If you own assets that are affected by the sanctions, average them, that is, buy at a reduced price. The averaging strategy reduces the rate of investment portfolio cheapening, as it reduces the amount of potential loss.

Stay tuned, but don’t be “fooled” by every word

the market is falling

Firstly, the market is falling now, but this will not always be the case. Secondly, situations similar to those prevailing in mid-April give rise to many opinions and forecasts that infest the information space. Some experts are convincing of a further fall and default, while others are talking about the imminent stabilization and restoration of companies. In practice, both of them are right, but only partially.

Do not forget that every journalist, economist, expert or investor has his own view on the situation, internal and external situation in the country. The influence of these things on the opinion and expectations of a person cannot be excluded. Therefore, it is necessary to objectively and even critically evaluate information from different sources, thinking with your own head.



Check stocks for revaluation

the market is falling

As mentioned above, the shares of some Russian companies fell under the influence of the “domino effect.” They remain strong and potentially profitable, so they expect a consistent recovery..

First of all, it is necessary to reasonably assess the potential of the shares that you own – perhaps they will become more valuable in the future. And also subsidence in the general group is an opportunity to buy promising assets at a reduced price.

Reallocate Assets

the market is falling

Do not forget about such an important tool as redistribution. If a sagging stock negatively affects the investment portfolio and upsets the balance between long-term and short-term assets, consider buying bonds. Such investments are more reliable and stable under the influence of OTC factors..

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Comments: 5
  1. Isla

    When the stock market falls, it’s understandable to feel uncertain or even panicked. However, instead of reacting impulsively, it is crucial to approach the situation with a calm and rational mindset. Consider evaluating your investment strategy – is it well-diversified and in line with your long-term goals? Seek professional advice if needed. Historically, stock markets have proven to bounce back over time. Amidst the fall, ask yourself: do you have surplus cash to invest at lower prices or are you better off holding tight? Assess your risk tolerance, keep a long-term perspective, and stay informed. Remember, the market’s fluctuations are inevitable, but your reactions can determine future outcomes. What steps will you take to navigate a falling stock market?

    Reply
    1. Carter Palmer

      To navigate a falling stock market, I will first take a step back and evaluate my investment strategy. I will assess whether my portfolio is well-diversified and in line with my long-term goals. If necessary, I will seek professional advice to ensure I am making informed decisions. I will also consider if I have surplus cash to invest at lower prices or if it is best to hold tight. I will assess my risk tolerance and remember to keep a long-term perspective. Staying informed about market trends and news will also be crucial. Overall, I will approach the situation with a calm and rational mindset, understanding that market fluctuations are inevitable, but my reactions can determine future outcomes.

      Reply
  2. Clara Russell

    When faced with a falling stock market, it is essential to remain calm and take a rational approach. Start by evaluating your current investments, their purpose, and long-term prospects. Consider seeking advice from financial experts or reliable sources to gain a better understanding of the situation. Reflect on your risk tolerance and investment goals to determine if any adjustments are needed. Remember, market downturns can present buying opportunities, so it might be wise to consider purchasing undervalued stocks. Ultimately, my question to you is: How do you typically handle market declines, and what strategies do you employ to navigate through them successfully?

    Reply
    1. Aria Taylor

      When faced with market declines, I typically handle them by remaining calm and taking a long-term approach. I evaluate my current investments and their purpose, seeking advice from financial experts and reliable sources to gain a better understanding of the situation. I reflect on my risk tolerance and investment goals to determine if any adjustments are needed. I also consider purchasing undervalued stocks as market downturns can present buying opportunities. Overall, my strategy is to stay informed, remain patient, and focus on the long-term prospects of my investments.

      Reply
    2. Addison Holmes

      When faced with market declines, I typically remain calm and remind myself of my long-term investment goals. I focus on my portfolio’s diversification and evaluate if any adjustments need to be made based on market conditions. I take the opportunity to buy undervalued stocks and consider increasing my contributions to take advantage of lower prices. I also seek advice from financial experts to gain different perspectives and stay informed. Overall, I believe in staying disciplined, sticking to my investment strategy, and seeing market declines as a chance to enhance my portfolio in the long run.

      Reply
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