How to Recoup Your Stock Market Losses

If you’ve suffered a 30, 40, or even 50% loss in this market, what’s on top of your mind right now is: how do I recoup it?

There are certain precepts that you have to accept before going any further, the #1 being that the stock market is still the greatest vehicle for creating (and destroying) wealth. If you agree, there is no reason to look for alternatives such as gold bullion or vintage wine. You just need to know how to use the stock market to your advantage.

A clean slate

The most important thing to realize is: you WILL NOT make your money back in the same vehicles that you lost it in. Every new bull market is powered by a new crop of leaders: technology, Internet, home builders, oils, ags… There is never a replay. If you are hoping for one, you are setting yourself up for a big disappointment detrimental to your financial health.

The lingering pain of recent losses clouds your judgment and impairs your action. Making a clean slate by getting rid of your losers may be very painful but the pain will subside as you stop the bleeding. Just don’t look back if any of your losers rebound. Only then will you have a clear unencumbered mind to go forward.

Basically, what happened, happened. There is no undoing or redoing it. You need a clean slate, and cash in the bank is it as far as stock investing goes.

New leaders

I don’t know who or what sector will lead the next bull market. Nobody does. Most predictions are cheap and worthless. But if you know how to recognize those leaders early on, you are half way there.

Learn from past mistakes

Look at the stocks you owned: they must have attracted you at some point for some reason. What was that reason? Chances are, it was valid, but you were late to the party and overstayed the welcome. Why didn’t you act sooner? If you can find out answers to these questions, you will learn how to recognize profitable patterns early on and apply them to new situations. It’s not the stock that makes you money, it’s what you do with it.

Learning from past mistakes can be applied broadly. If you are too busy in your professional life, you may not have the time to manage your portfolio and will need to hire a professional. Why did the one you had do so poorly? Did you choose lightly? Or did you like the guy but procrastinated too long to follow his recommendations? Did you chase performance by buying the hottest mutual funds of the previous year and churning your account? Did you listen to CNBC too much? Good professional advice is hard to come by and cannot be bought the way you buy flowers for your spring garden.

Slav Fedorov is a full time stock trader and founder and managing member of TradingZoom, LLC - a provider of timely stock picks in small caps based on proprietary selection methods - http://www.tradingzoom.com/

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Will the Stock Market Crash in 2009?

2008 was a disastrous year for stock markets from around the world with many seeing falls of over forty percent. The lack of available credit due to the “credit crunch” certainly took its toll as did the seemingly worldwide fall from grace in the banking sector. Unemployment rates are going through the roof and confidence in the economies of some of the major players (countries) is at an all time low, then there is the housing market, please do not get me started on the housing market, the bubble has well and truly burst there. So what about 2009? Will stock markets from around the world continue to fall or even crash again in 2009?

The fall out from the credit crunch is showing no signs of abating, in truth things seem to be getting worse. Despite a number of “recovery measures” and “bail outs” from various governments credit is still in short supply. The banks seem unwilling to lend the cash or are perhaps not in a secure enough position to lend it. Something has to give if things are going to improve.

I personally can not see a great deal of positive earnings data coming through from the major companies this year but can see a large amount of profit warnings in the offing. What would this all mean? Well only one thing I am afraid to say, heavy losses on the stock markets.

Then there is the seemingly ever-present terrorist threat. What if the United States or one of the other major Western countries was to suffer another major terrorist atrocity? Again the result would be further heavy losses for the stock markets.

All of the above does make the best of reading for those of you who are hoping that the stock markets will make some healthy gains this year; I too am hoping that I am wrong as I have some of my own hard earned cash invested within a number of equity based funds.

As a conclusion I believe that on average stock markets from around the world will lose twenty percent of their value in 2009.

Steve Hill is a webmaster from Birmingham, he has interests in a number of websites including: stuttering therapies - DVD authoring

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