Lessons to Learn from a Market Downturn (5 of 7) Lessons to Learn from a Market Downturn (7 of 7)

Lessons to Learn from a Market Downturn (6 of 7)

by
Be Your Own Advisor: The market news gets bleaker every day - now you're paralyzed with fear! The lesson: Market news has to be interpreted relative to your situation. Sometimes investors overreact, particularly with large or popular stocks, because bad news is replayed continuously via every news outlet. Here are some steps you can follow to help you keep your head in the face of bad news: Pay attention and understand the news, then analyze the financials yourself. Determine if the information represents a significant downward financial trend, a major negative shift in a company's business, or just a temporary blip. Listen for cues the company may be downgrading its own expected returns. Find out if the downgrade is for one quarter, one year or if it is so abstract you can't tell. Conduct an industry analysis of the company's competitors. After a thorough evaluation, you can decide if your portfolio needs a change.
Source: http://www.investopedia.com/articles/basics/08/lessons-market-downturn.asp