Markets might be falling, but Foolish investors will be licking their lips at the prospect of buying high-quality companies at cheap prices.
I saw both my self-managed super fund (SMSF) and personal portfolio plunge. My portfolio is down a surprising 2.5% in the past week. My SMSF is down 6.3%. By comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is also down 6.3%.
Some of my stocks are down more than 10%.
Rather than panic, I have some cash on the sidelines and a flurry of dividend payments to arrive over the next few months. Much of it will be deployed into the market.
Those who have sold out or are thinking of selling and getting out of the market in the hope of avoiding further falls; those who have margin loans and are being hit by margin calls, and those who have stop losses in place are going to lose out.
Trying to time the market is a mug's game.
Invest for the long term, stay in the market and you likely don't even have to make any decisions about what to sell or how much to sell. Over the long term, if you follow that process you'll have much more chance to beat the market.
Sure, some traders will be winners by exiting the market now and entering at a later stage. Most of that will be luck rather than skill. Most traders over the long term will see their performance fall by the wayside – and would've been better off keeping their cash in the bank – even at paltry rates of 2 or 3%.
It sure hurts to see your investments fall there's no doubt about that. Psychologically, we are wired to feel a fall of $50 much more than a gain of $100. Temperament and patience are two of an investor's greatest virtues – if you don't have them you're better off handing your cash to someone else to manage.
As fellow Motley Fool Dividend Investor Advisor Andrew Page recently wrote,
"One of the funny things about crashes/corrections/pull-backs (whatever you want to call them) is this:
We all view past crashes as opportunities, and future [and current] crashes as risks"
Investing into the stock market at the depths of the Global Financial Crisis in March 2009 was the best time to invest in the past decade. since then, the S&P/ASX 200 is up more than 40%. Many high-quality companies are up well over 1,000% since then.
Virtually nothing has changed for most of the companies in my portfolios – they are still generating revenues and making money – and many will be 10 years from now.
These falls should be viewed as an opportunity – not as something to fear.
