If you are investing in the stock market, you’ve heard many times that stocks aren’t safe investments. What are the best things to do when the stock market is going to crash? What are the best ways to make money in a falling market?
Many investors will going to get panic. Other small investors and even big time investors will pull out their investments in the market because they believe that’s the safest way.
But, there are wise and intelligent investors who can still make money even when the stock market is going to get crash. Are familiar with what Warren Buffett said about “investing”? He onced said;
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
What does this quote really mean? We all know that the stock prices are low when the market isn’t good. This is the right time to buy more stocks. Even though you are afraid and panic, you still have to keep on investing.
Falling Stock Market Favors the Long Term Investors
If in the first place you are a long-term investor, you will believe that when the stock market is going to crash, it will be a good opportunity for you to buy many stocks. The following will give you an idea why falling stock market is the best opportunity to buy more stock shares.
Assuming you are doing a dollar cost averaging whereas you are investing $100 per month for XYZ stocks.
| Month | Investment | Stock Price | Number of Shares Bought |
| January | $100.00 | 50 | 2 |
| February | $100.00 | 20 | 5 |
| March | $100.00 | 10 | 10 |
| April | $100.00 | 5 | 20 |
| May | $100.00 | 1 | 100 |
| June | $100.00 | 1 | 100 |
| July | $100.00 | 1 | 100 |
| August | $100.00 | 1 | 100 |
| September | $100.00 | 5 | 20 |
| October | $100.00 | 5 | 20 |
| November | $100.00 | 20 | 5 |
| December | $100.00 | 25 | 4 |
| Total | $1200 | Average: 11.583 | 184 |
What have you noticed to the table? How many times did you bought stocks for $100 at a low prices? How many stocks did you acquired during that time?
The average price of your stock is $11.583.
Buy Blue Chip Stocks to Make Money in a Falling Market
Always remember, the stock market will bounce back. Don’t get panic. Invest in long term. Buy as many stocks as you can and prefer blue chip stocks. Blue stocks are safe. But you only need to wait. You can make money in a falling market as long as you keep on buying when the stock prices are low. You will only realize your profits when the stock prices will increase; when the stock market will recover.
So, what will you do if the stock market crash today? Will you pull out your money? Sell all your stocks even if they are at a very low price? Or will you continue buying stocks? Let me know your opinions about this situation.
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