The Intelligent Investor: Tempest-Tossed? Take Some Control
In normal times, the best advice after a market decline is "Don't be afraid." But these are not normal times, and anyone who is not afraid after a 50% market decline has a few screws loose. The trick is to channel your fear into sensible action that will improve your financial future.</br></br>Instead of big impulsive steps you may regret later, you should take small and careful steps that will make you feel you have taken charge. Mental-health experts have found that merely believing you have some control over a painful situation is enough to make the pain more bearable. At a time like this, taking a little bit of action can give you a lot of comfort -- both as an immediate salve for your market wounds today and as a portfolio strengthener in the years to come.</br></br>For investors, that means being deliberate in everything you do and making sure that all your decisions are gradual and incremental, rather than sudden and drastic. Call it "smart panic" -- calculated actions that free you from the chains of inertia without compelling you to go haywire.</br></br>Normally, inertia keeps investors locked into all their investments, good and bad. As Sir Isaac Newton might have put it, an investor at rest stays at rest, and an investor in motion stays in motion, unless acted upon by an outside force. Severe losses can shock any investor out of inertia, often in destructive ways.</br></br>Here is a list of constructive steps you can take instead: