Should I Panic When Share Prices Drop?

No. It’s Bargain time! Keep this in mind: Buy low, sell high. The rule of thumb is ‘Know your fundamentals so you know when a price drop means opportunity.’

In fact, when share prices drop, it is the best time to buy as much shares as possible because at some point they will grow again. Have you ever wanted to buy shares of a certain company but you never had the money to do so?

When the market suddenly becomes low and share prices keep dropping, that is the best time to buy shares of those companies you’ve wanted to buy shares from. Your decision should, however, be based on the fundamentals of the company you want to invest it.

Bond Prices Drop

When share prices go low, bond prices usually go up. This is usually an advantage for people who have invested in bonds and are wishing to sell. Higher stock prices tend to be a pain to bondholders but those with locked interest rates need not worry that much.

Expect Variation

When investing in shares, one should always expect fluctuation in share prices. Most of the time there is always a positive slope when one looks at graphs of share companies.

So when share prices drop, rapidly, that’s when one should take advantage of the moment. It is prudent to be cautious about buying into a company, but when you have calculated your risk, you can trade with knowledge.

The first thing that people do when prices drop is, sell their shares. That is, by far, the worst thing anyone can do in that situation unless there is a strong compelling reason to do so. In fact, selling in a panic is rarely a smart move.

They Always Rise Again (At least most of the time)

Shares prices always go back up (for most companies). In most cases, share prices rise twice the amount it fell. The problem with selling when the share prices drop is that you miss out on gains that occur sometime after the decline.