3 mistakes investors should avoid when the stock market goes down

10/05/2022 07:41 GMT+7

Continuing to be a “sad” trading day for Vietnam’s stock market when it dropped nearly 60 points, officially losing the 1,300 point mark. The number of stocks reduced to a full extent on all 3 exchanges up to 356 codes, many stocks were oversold at the floor price of several million units but there was no demand.

According to Mr. Nguyen The Minh – Analysis Director of Yuanta Securities Vietnam Company, the negative information is not too big of a problem for the market at this time, the reason is that the demand is too weak. The 1,300 point area is considered a psychological threshold to attract long-term investors’ cash flow, but this “breakthrough” index shows that the market trend is not very positive.

According to Mr. Minh, tomorrow’s session is very important for the market, if the market can “stand” at the old bottom of 1,262 points, it is likely that there will be a recovery soon. On the contrary, the market will be quite negative if it fails to keep the above level, in a worse scenario VN-Index may return to the level of 1,150 points.

With a long-term perspective, the expert said that investors need to closely observe the market until the end of May. In the scenario of keeping the 1,300 mark until the end of May, the uptrend can still be established. However, if the VN-Index “breaks through” this milestone, the old scenario in the period of 2018 – 2019 will repeat. Accordingly, historical experience shows that the market will take a long time, even longer than 1 year for us to create a new uptrend.

Mr. Nguyen The Minh – Analyst at Yuanta Securities Vietnam

In a time of negative market movements like the present, Mr. Minh said that it is important for investors to have a clear investment strategy, avoiding the following common mistakes:

First, buy average price

When the account plunges, a lot of investors use the bearish averaging method. In 2020 and 2021, “finding the bottom” to average the price is a method applied by many investors because of the high probability of winning. However, this year the market is unpredictable, so buying a moving average is really a dangerous investment strategy that investors need to avoid, it will make you lose at present and the loss may still be. more serious when stocks fall deeply. Therefore, experts say that if investors “find the bottom” for the first time is not good, they should quickly cut their losses, wait for a safe buy point, then join.

Second, try to predict the market

On the surface, setting targets to buy when the price hits the bottom and sell at the top is a perfect strategy. But the problem here is that most people cannot predict exactly when the price will bottom or peak. That’s why experts say “trying to guess the market” is the top mistake.

According to Mr. Minh, the most important thing is to come up with a trading strategy suitable to the current context, but it is very difficult to find the bottom and guess the top. More dangerous is that many people are still confident in their predictions, making all-in decisions at the threshold that is believed to be the bottom.

Third, there is no clear stop loss time

It is very easy to buy in, and difficult to sell. A lot of people have paid a very heavy price when they think “The price of this code has bottomed and can’t be cheaper”. In fact, many stocks that were in a decline never rose again. Therefore, “collecting losses” would be a huge mistake while the market is having negative movements like now.

Providing a strategy for long-term investors, experts said that besides considering the status of cost prices, it is necessary to wait until the end of May to make a decision. If the index can still hold the 1,300 mark, the long-term trend still holds. However, in the opposite case, investors should consider reducing the proportion of the portfolio and wait for new opportunities.

At the same time, Mr. Minh also noted that consumer, retail and chemical stocks are still “haven” for investors despite the less positive long-term trend of the market.

According to cafef.vn