Investing

You Must Know This About the Stocks You Invest in

After a rough few weeks in the stock market, Motley Fool podcast host Chris Hill has a question he hopes you can answer.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Dec. 6, 2021.

Chris Hill: It’s Monday, Dec. 6. Welcome to Market Foolery. I’m Chris Hill. It’s just me again. We’ll get other people in the mix tomorrow, I promise.

But right now, it’s just you and me. Because there is a question I need to ask you, but first, how are you doing? Are you all right? How is the holiday shopping going? Did you find that thing you wanted to get for what’s his name? Or what’s her name? You know who I’m talking about. O.K., well, then you got to keep looking. Hey, how is Hanukkah? Was it good? Good latkes and all eight candles lit last night? Good, pack the dreidel away until next year then. Hey, how’s school going? Are you ready for final exams? I know, but you know what, you’re not alone. Everyone in your class feels like that. Everyone in your grade feels like that. You’re not alone. But look, you’ve got to take breaks. You can’t just lock yourself away and say, well, I’m going to be in my room studying for the next five hours. That’s not going to work. You’re going to fry your brain and you’re not going to be as productive, so build in some breaks. Take some study breaks, take a walk, watch a show, get outside with other people. Go look at some decorations. You’re going to do fine. You’re going to do well in your finals, and then it’s winter break and you can relax. Do you study, but seriously, get outside every day and look around. Did you get a Christmas tree this weekend? I did, too. Yeah, normally, I’m like a mid-December guy with the tree. But after last year, I had to go early. It’s crazy, right?

Hey, speaking of crazy, can we talk about last week? Yeah, let’s talk about that for stock investors. Holy cow, Friday was a bad day, at the end of a bad week, at the end of a bad month. That was the worst four-week stretch in over a year. You weren’t imagining it. That really happened. That was just for the market in general. If you want to get a little more specific, we can talk about the Nasdaq, 3,300 stocks on the Nasdaq. Last week, 20% of them hit 52-week lows  — 20%. So much red. Last Wednesday, every stock I own was down, everyone. Wait, no, I had one that was up, I had one in the green, but when the market closed on Wednesday afternoon, I looked at my holdings and it was the sea of red and one tiny dot of green because one stock I own was up 3%. 

I know you have questions. I have questions, and there’s a good chance a lot of the questions you have are the same ones I have. Because I had stocks getting whacked last week and with some of them, I just kept thinking, O.K., so do I buy more? I believe in the business and the stock is 25, 30, 40% cheaper now, do I buy more? Maybe you had similar thoughts about your stocks. Do I sell this? Do I double-down on this? Do I look at my watch list or there are other stocks on my watch list that I should be buying instead? Again, 20% of the Nasdaq hit a 52-week low last week. Chances are if you’re keeping a watch list, some, if not all of the stocks on that watch list went on sale last week. So much red, so much emotion, so many questions. I know today was better. I know the headlines tonight and on Tuesday morning will be about how the Dow was up, 600, 700 points or whatever. But after a week like that, that came after three other weeks like that. After a month of gut punches and seeing red, there’s really only one question, when it comes to stock investing: Are you in or are you out? At the time like this, right now that’s the No. 1 question that matters. The only person you need to answer that question for is yourself. 

The good news is, there is no wrong answer. There really isn’t. I’ve said it before and I will continue to say it. There are plenty of smart people whose paths to financial independence have been, are and will continue to be paved with index investing. After the last few weeks, I’m sure wherever [Vanguard Group founder] John Bogle is, he’s smiling. I like John Bogle. Anyone who ever met John Bogle couldn’t help but like John Bogle. But you and me, we’re stock investors, and it’s perfectly natural to feel scared or confused or just down or any other emotion after the past four weeks that we’ve had because this isn’t fun. This is not the fun part of stock investing. Just like March 2020 was not fun. That was a scary month. Although we came out of that O.K. Thomas Paine wrote, “These are the times that try men’s souls.” He was writing about war. This isn’t war, so I’m not suggesting that this rough patch we’ve gone through as stock investors is trying anyone’s soul. But these are definitely the times that test people’s stomachs. Which is also not a fun time. Even if something good is attached to it, any endeavor that tests your stomach is going to be rough. It could be a roller coaster, it could be a 72-ounce steak that you get for free if you eat the whole thing, running a marathon, investing in stocks. 

All four of those are going to test your stomach. I want to be clear. I’m not talking about the process of picking which stocks to invest in. There are a lot of factors that go into that. There’s a lot of nuance. Some of it is about us as individuals. How old you are, your financial situation, what your priorities are, whether you’re married or you have kids or other people that you’re supporting. There are so many things that are just about you as an individual. Then there’s the whole other category, the stuff that’s about the businesses. The research that we do around companies, their industry, competition, the management. Who are the people running this business? Picking which stocks you want to invest in, that is nuanced, that is layered, and I am not talking about that. I’m not asking you a question that involves nuance. This is binary. Either you’re a stock investor or you’re not, and either is fine. But if you are, if you choose to be a stock investor, then days like last Friday and weeks like last week, and months like the past month or months like March of 2020, that’s part of the deal. That’s the price of admission. We’re on the ride, and that’s what the ticket costs. 

In the same way we talk about knowing why you bought the stocks that you bought, being able to tell someone in a few sentences, this is why I bought shares of company X. Being able to do that is helpful for us as investors for a lot of reasons, including the fact that knowing why you bought what you bought is probably going to help you sleep at night, no matter what direction the stock is going in. In that same way, being able to answer this question is going to help you move forward on whichever path to financial independence you take. When it comes to stock investing, are you in or are you out? I hope you’re in. I want you to be in. But I also know that only you can answer that question in a way that works for you, so please do that. If you’re in, well, I’ll be here on your podcasts machine talking with other Fools and we’ll work our way down the path together. In the meantime, here’s the Ramones. I’ll see you tomorrow.




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