January 15, 2016

What to do when the stock market crashes?

It has been a terrible week for stocks. Even worse, the entire time we have been building our stock portfolio on YouTube since summer 2015 was a bad time for stocks. We are buying European stocks and the Euro Stoxx 600 index was down more than 12% during that time.

Be warned! Looking at past performance is the worst mistake an investor can make because it gives dangerously wrong signals. If stocks depreciate, the entire portfolio is in the red. That looks like stocks are a bad investment and should be sold. However, if stock prices are lower, this is actually a good time to invest.

Warren Buffet thinks it’s a good time to invest now. If you search for Google, you will find another 200,000 search results. If you search for a bad market in 2016 however, there are over 900,000 search results. Since more pages talk about a bad investment year 2016, you might be fooled into thinking that you should sell.

That might or might not be a good idea. What is sure is that the bad prospects of the Google search are already reflected in today’s stock prices. If people worry even more, then the markets can only go further down. We can’t tell if that will happen.

So what should you do instead of looking at the prices in your portfolio? Look at the Obermatt ranks in your portfolio instead. This video illustrates how this is done. You can copy a Google Sheet template that you can use to display the Obermatt ranks in your portfolio.

In this Google sheet, you can enter your portfolio and look up its Obermatt stock ranks automatically. To get the latest Obermatt ranks, subscribe to the free Obermatt investment alert and you will receive a link to a csv file with the most recent ranks in your mailbox every week. Import this file to your Google sheet and - voila - you have the latest ranks of your portfolio. If it’s all green, don’t worry. Markets will turn eventually. They always have. If some stocks are red, take a closer look and decide if you want to sell.

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