Do not let the stock drive you crazy

How did it feel,
if the shares fall more than 200 points
Once, on a wonderful day? Stay only
to get more in the next year.
If the volatility of the market forces
You feel on the edge of the cliff, good
Welcome to our club.

On the index last week
Dow Jones had three
favorable terms 100-plus motion
one minus 150 points. This is enough
high volatility - 2.6% for the week. AND
It's enough to make even experienced
investors feel at ball
ping-pong table.

"And negative, and
positive news make people
is under stress".
- says Dzhon Greybl, professor
financial planning at the University of
Georgia in Athens. Grable, who
exploring how financial news
affect people, he said good
news may be even more intense,
than the poor, because "people perceive,
that they missed their opportunities".

The question for investors:
you make money in response to this
stress? Typical investors have
sad experience in the market trading:
buy expensive and sell cheap. here
why there is a considerable gap between the
income investors and the market itself
profitability. "The greatest losses
occur after a market decline".
according to the financial and research
firm Dalbar, because investors are selling,
when the market falls, and then wait too
long before buying the shares back.

this happens often,
because fear is pushing for a decision
investors. Market starts to fall, and
response we sell. "we are emotionally
We react to loss. We can not do anything
about it", - says Maykl Fink,
Professor of the Department of the University of Texas
for personal financial planning.
Losing money activates more emotional
part of the brain, he says. "We have to
struggle to learn to slow down
these emotions", - he adds. "Even
experienced investor will feel
such concerns".

Easy access to
information such as an application to the
market news on the phone or
headlines that scream about ??
following the collapse of the market - it does not help.

"The problem is that
We are very sensitive to losses, and
because sometimes "look" for short-term
loss through a magnifying glass".
- says Shlomo Benarttsi Professor
University of California, Los Angeles,
and chief behavioral economist
Allianz.

There are some tips
which will help you:

1. Load the possible
loss plan

Instead of
focus on your balance now,
compare it with what you had in
September, says Meir Stetmen Professor
Finance biznema University of Santa Clara.
As your current balance compared with those
what you had in late 2013? investors often
forget about these comparisons, because
they look at the prospects ahead, and
not on past experience", - he said.
Therefore, we must focus on
the long term and take into account
possible losses in terms of trade.

2. Focus on
particular purpose

Most people, even
They do not understand that sometimes fear itself causes
their solutions, says Richard Peterson,
managing director of research
and consulting firm MarketPsych. "it
really hard to understand when you
in a panic, you're in a panic", - He speaks
he. Thus, it is important to
investors train their brains,
to focus on future goals,
he says.

Each investor must
sit down once a week, to think in
for five minutes and ask yourself: "Where
I want to be in 20 years? What does it look like?
What do you feel?". This allows
scatter the strong emotions and replace
its longer-term feelings.

3. Review your
tolerance for risk

period volatility
market - this is the best time to carefully
look at your attitude to risk.
Your options correspond to investment
risk appetites?

"When the market is
up, and people take risks,
they feel good, they love
markets, they, as a rule, are more
a positive outcome", - He speaks
Mr. Grable. "Their risk assessment is likely
too high. The best time to
measuring your risk tolerance
- in the midst of some bad news".
- says Mr. Grable. He and his colleagues
We developed a test for the risk, which can be
found on the Internet.

4. Remove from the news

Try to resist,
looking for news about the market in your phone
and other sources, if the market is
up or down, said Mr. Benarttsi.
"The market has gone down - they may be scared
and in a panic sell all at the bottom. If
gone up, they might think that all
so well is that, should further
go up and at this point too strongly
risk".

It is important to restore
the balance, that is, for example, once
a year to sell some of the assets that
We gave a good income and reinvest
in others, which do not work well to
make sure that your portfolio matches
your plan investment allocation,
whether it is 80% stocks and 20% bonds or
any other factor. "Development
system where you are restoring a regular
balance, but do not take in the habit of changing
this balance every week or every
month will be easier for you themselves to
to cope with the short-term volatility".
- says Mr. Finke.

5. Create concrete
plan

Or, as you call it,
personal investment policy. Mr.
Peterson calls it "management plan
financial stress"That is written
Plan with action points that
describe how you will behave in
specific market situations. For example,
"If my portfolio falls by 20%, I
I take money out of my effective
investments and buy low-efficiency
assets".

6. Do not forget the past

We must remember that we
We have experienced this type of volatility, and it was
much worse - it can ease nerves
investors. Do not forget that those who have bought
assets with long-term perspective in
2008 and 2009, took the lead right now.
Treat also biased towards the future.
"We tend to see one future. we
not inclined to see the full range of opportunities".
- says Mr. Benarttsi. "When one of
these "futures" is derived,
whether it is good or bad, we go
completely shocked".