Special update: stock market sell-off is no time to panic

A special message from Motley Fool Canada’s Chief Investment Advisor, Iain Butler.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Hand flipping wooden cubes for change wording" Panic " to " Calm".

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

This article was originally published on Fool.ca, by Iain Butler (CFA) Chief Investment Advisor, Motley Fool Canada

Well…hasn’t this been a trip to kick off 2022?!

I don’t know about you but a constant thought running through my head whilst checking stock quotes far more often than I should of late has been, “How is the market still so close to its all-time highs when it seems everything I own is being SLAUGHTERED?”

And of course, the real kick-in-the-teeth, for me anyways, has been Shopify. By far the largest position that I own personally, and it closed down by more than 13% on Friday. In a day. Pushing its all-in decline from its November high close to 50%. Too close.  

Boy, do I miss November.

Admittedly, I’m rattled and making this more personal than perhaps I should. 

Thing is, I’ll bet I’m not alone and I’d like to convey my approach to the overall market climate that we’ve found ourselves in to open 2022.

It’s actually rather simple.

The anchor in my investing life is the number one Foolish investing principle that everyone should have plastered, metaphorically or physically, anywhere and everywhere.

Here it is……

DO NOT INVEST A SINGLE DOLLAR INTO THE STOCK MARKET THAT YOU COULD FORSEEABLY NEED WITHIN THE NEXT FIVE YEARS.

Without that anchor, I’d be a wreck right now.

Thanks to it, though rattled, my head is at least clear. To the point that I was actually able to make some portfolio moves in the face of this adversity. Because of Fool trading rules I can’t mention but a new position has been added and several have been added to. Exciting!

That’s it.

So…the exercise that I might suggest that you undertake is to think about your next five years. What’s on the horizon that might require you to draw on your investment portfolio? And tomorrow, or as soon as possible, take the number you come up with and make sure you have that number not invested in the stock market. Like, nowhere. Not a bank. Not a utility. Nothing.

And then, once you have that message engrained and truly live by it, you’re going to find that days/weeks, heck, the way January is shaping up, months like what we’ve experienced are going to be a whole bunch easier to digest.

It’s easy to think that we all should have done this or should have done that. And we can share stats til we’re blue in the face about this being an entirely natural market spat. Fact is, that kind of rear-view thinking doesn’t amount to much when we’re being punched in the face.

All that matters is how we manage from here and the best I can offer right now is that you at least consider sharing the same anchor.

Fear not…this too shall pass.

P.S. – The number two principle? Bourbon. Kidding. Sort of.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Iain Butler owns Shopify. The Motley Fool UK has recommended Shopify. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing For Beginners

3 ways I’m trying to future-proof my Stocks and Shares ISA for 2025 right now

Jon Smith runs through different measures including targeting dividend shares to help his Stocks and Shares ISA for next year.

Read more »

Bronze bull and bear figurines
Investing Articles

US stock market: the winners and losers one week after the election

Last week's US election spurred big moves in the US stock market, with some global indexes making record highs. Here's…

Read more »

Investing Articles

The latest FTSE dip has handed me a brilliant opportunity to buy cheap shares!

Harvey Jones is on a mission to take advantage of the recent FTSE 100 dip by going shopping for cheap…

Read more »

Investing Articles

After falling 13% this ultra-high-income share yields 7.25% with a P/E of just 10.1!

Harvey Jones couldn't resist buying this FTSE income share. He thought it looked great value in September and it's even…

Read more »

The flag of the United States of America flying in front of the Capitol building
Growth Shares

2 FTSE 100 stocks that could soar while Donald Trump is US President

These two FTSE 100 companies have a lot of exposure to North America. So, they stand to benefit from a…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,000 of savings? Here’s how I’d aim to turn that into £5,832 a year of passive income!

Smaller initial investments in high-yielding stocks can generate much greater passive income over time, especially if dividend compounding is used.

Read more »

Investing Articles

Will the Lloyds share price drop to 50p in 2025 and should I buy the stock if it does?

The Lloyds share price has fallen 12% in six weeks, making the stock cheaper on a price-to-book basis than NatWest.…

Read more »

Investing Articles

As BT’s share price drops 8%, should I buy more?

BT’s share price looks a bargain to me on several key stock measurements, offering a high yield as well, supported…

Read more »