Some of you were anxious to get the second installment of my post entitled “How to survive difficult times – Part 1.” It is understandable that many of you wanted to read it considering that we are in such difficult times. So here is the second and last installment of this two-part post on how to survive difficult times.
4.) Don’t panic – Warren Buffett, once wisely said, “Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, ‘I can calculate the movement of the stars, but not the madness of men.’ If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.” I certainly agree ! Most investors bail out of the market upon the first sign of bad news or if the government fails them. They liquidate their positions even at a loss when seeing the first sign of trouble.
The idea was always to buy low sell high and not the other way around. Instead most investors do exactly the opposite. They buy when the market is very optimistic in which prices are sky high. They sell when the market is depressed at which point stock values goes down because they panic at the first sign of trouble.
If you have studied a company’s fundamentals well and have picked companies with as Buffett likes to call it “Durable competitive advantage” then the best thing you can do now is to do nothing. Do not sell. Just wait for it to come back up. It certainly will come back up after several years. Always invest for the long term. Markets always go up and down. Never sell at a loss. Maintain your market position especially in these difficult times.
5.) Learn to value, value investing – These difficult times present a good opportunity to grab a book and study what value investing is all about. Value investing is the stock market strategy that Warren Buffett has adopted. (If you want some great value investing books and some great Warren Buffett books, click on the links to get it at my Guerilla Blogger eStore,)
My brother argued with me that he prefers day trading over value investing. He tells me that there are people selling products in the internet that claims to make you rich in the stock market in a short period of time. I told him, I’d rather invest a Buffett book than buy the products of those people. I am not saying that the claims of these people are not true. Perhaps they did get rich in a short period of time in the stock market. But I always ask my brother this question, “Who is the multi-billionaire, them or Buffet ?” Why should I listen to them when value investors like Buffett have already proven their long term success. Logic dictates that I’d rather listen to Buffett. Besides Buffett once wisely quipped that “Wall Street is the only place in the world where people driving a rolls royce take advice from people who take the subway”
6.) Pray – The best advice for these difficult times. You might argue that praying is old fashion and that it is only for religious people. But believe it or not study shows that prayer and faith help in the recovery from heart attacks, those in drug rehab, stroke, alcoholism and depression. Call it the placebo effect or whatever you might want to call it but in the end prayer does work.
Besides, let us just say for argument’s sake that later on it was discovered that God is not real and that prayer does not work. What harm will it do to you if you believe in a God and you believe that prayer works even if it turns out to be untrue?
But there is a real God and I believe in the promises of his Words and I firmly believe that prayer works. I not only believe it, I know for a fact that God exist and that He answers prayers. Even though I can’t prove it tangibly; those who could do not believe in Him cannot disprove it as well. So it is so much better if you just take a leap of faith and believe in Him.
And let me leave you with this wonderful verse which will also serve as a most fitting advice for these difficult times “Do not be anxious about anything, but in everything, by prayer and petition, with thanksgiving, present your requests to God. And the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus.“ Philippians 4:6-7 (NIV)