4 Investor Mindsets in the Current Stock Market Crash
So what’s your strategy in these turbulent stock market times? Is your heart racing, are you panicking? What kind of panic is it? Is it the “am about to lose my house and pension panic” or the “am so afraid to leave the house panic”? If you are beginning to fidget due to the current state of the markets, then it might console you to know that you are not alone.
A stock market crash, for those who may not be familiar with the phrase is a sudden decline in stock prices across a significant section of the market. This therefore means that crashes like the one being experienced now, are not for the faint-hearted. So how does a stock market crash animate the actions of an investor? Investors react to stock market crashes pretty much like how they are doing right now, depending on their investor mindsets. Here are 4 investor mindsets that will explain the actions of investors at the moment.
- The Red Button Pusher
This describes the mindsets of investors who react with heart racing panic whenever the markets drop. They are pretty much like the crazy people who burn down the entire barn because they saw a snake in one of the barn’s partitions. These kinds of investors are pretty much selling off all their stock at the moment. Their agent’s phone is literally blowing up right now.
- The Careful Gambler
This describes the kind of investors that make investing decisions that are somewhat similar to a gambler’s decisions, but with a little more poise. These kinds of investors are also scared almost out of their wits by the stock crashes, but are not burning down the entire barn yet. They will therefore sell off a part of their portfolio and keep a certain part intact. In their minds this is a great balance, you keep some stocks in case of a market rebound, while also salvaging some value in case the market completely goes to hell.
- The HODLER
HODLING is a term in investing referring to investors who are unmoved by changes in market prices. These investors believe in staying in the game no matter what. If you are into crypto investing you have probably heard of these types, they will not yield any ground when it comes to the number of stocks they own regardless of the price.
- The Gold Digger
You have probably heard of this term being used in an unsavory way. In our case though, this term describes investors who see a stock market crash as an opportunity to dig deeper into the market for more value. Such investors take advantage of the price drops to accumulate more stock at lower prices in anticipation of a future market rebound. A lot of these investors register huge wins in the long term since once devalued stocks do eventually recover.
So if you are new to the investing world, these are four categories you are likely to fall under. Subscribing to any of these mindsets will not only reveal the kind of investor you are, but will also reveal the kind of person you are.