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Black Swans - What to Do?
How to React Right When the Stock Market Gets Turbulent!
Black Swans, as one calls them, are unforeseen events that lead to a sudden collapse of global stock markets.
The History:
The name “Black Swan” originates from a book by writer and stock trader Nassim Nicholas Taleb, and it stands for an event that no one expects and often leads to a fundamental change in external circumstances. The most commonly cited example is certainly September 11, 2001, when two planes flew into the World Trade Center. No one can deny that the world has been different ever since. On a smaller scale, such events occur much more frequently at the company level. The only protection is adequate diversification, which we will continue to ensure in the yield portfolio.
We are Prepared for All Eventualities:
Our instincts often stand in the way of success in the stock market. We flee when we should stay and strike, we buy and celebrate when it would be better to switch to the selling side. Investing countercyclically? Easier said than done, who is immune to fear or panic? At least in terms of the stock market, you can be sure that we at VFCM have the necessary experience to react confidently to all events.
These Mistakes Must Be Avoided at All Costs:
The biggest mistake after a sudden stock market crash: selling! The statistics of the last 100 years speak volumes – those who were on the buying side in the midst of the greatest panic were able to build great fortunes. Such opportunities are rare but must be consistently seized!
Black Swans are:
- Always unforeseen
- Associated with falling prices
- Very rare
- No reason to panic
- Entry opportunities
- Usually of short duration
Our Conclusion:
No one likes to be caught on the wrong foot. Even the best stocks cannot escape a downward spiral triggered by a Black Swan. It is all the more important to always keep a liquidity reserve on hand. It would be completely wrong to throw one’s holdings onto the market! If such an event befalls us, we will promptly inform our subscribers about further steps!
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