Hedge funds and investing firms may make millions on seismic shifts in stock prices that a single tweet from President-elect Trump can cause.
But regular people like us – we tend to lose out when we buy or sell stocks based on fear, hope, or media hype. The big players have huge advantages in place. And by the time we get our trades going, it’s already too late for a big win. We end up buying high or selling low … the exact opposite of how you want to invest in the markets.
For individual investors, the best bet is to stick with your original plan – especially if that plan involves buying and holding stock in solid companies. Strong companies can weather Twitter tornadoes and bad press – it just takes some time.
So if you get the urge to sell when you see a stock you own taking a big price hit after something pops up on social media – WAIT. A company you wanted to own stock in yesterday probably still fits into your portfolio today. If you still want to sell once the panic has died down, take the time to re-evaluate your holdings before you make that decision.
After all, scooping up stock in a solid company at rock bottom prices may be a better choice for your portfolio in the long run.
Buy low. Sell high.