Based on these figures, you should review your positions once every four months to be safe. I’d also suggest checking in toward the end of earnings season, so that any information you decide to act on is current.
So what should you do if you knew the Dow Jones Industrial Average (INDEXDJX:.DJI) and S&P 500 was going to drop 5% or 10% tomorrow? Well, in one sense we all know a correction is coming. It’s inevitable that the market will reverse course and head lower in the coming months or years. So if you’re performing this kind of portfolio review regularly, then besides buying stocks with your extra cash after prices fall, the best thing to really do is … do nothing. Don’t panic. And by all means, don’t sell. Sit back and relax, read the morning paper, sleep well at night, and know deep down that your money is safe and that the market will once again rebound and your assets will soon continue their appreciation journey.
The article What Should You Do If You Knew a Market Correction Was Coming? originally appeared on Fool.com and is written by Matt Thalman.
Check back Monday through Friday as Fool contributor Matt Thalman explains what caused the Dow’s winners and losers of the day, and every Saturday for a weekly recap. Follow Matt on Twitter: @mthalman5513.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.