How to survive a correctionThought some here might appreciate this.
1.) Don't panic, use your emotions as a contrary indicator. The more fear you feel, the closer we are to the end of this correction.
2.) Understand that what is occurring is an exogenous, liquidity driven event. It is not related to the long term fundamentals of energy/commodities.
3.) Resist the urge to follow the herd stampeding out, short term.
4.) Don't try to time the market. Markets can go lower than what seems reasonably possibly, just as they can go higher than anyone expected.
5.) Well capitalized investors should continue the dollar cost averaging process on high quality names in the energy and commodity sectors.
6.) Look for signs of capitulation among retail investors, particularly on message boards. When you start hearing comments like: "I'm getting out, I can't take it anymore, I'll never use margin again, the market is rigged by hedge funds, going down I told you so, we are entering a global depression," etc etc, the market is getting ready to turn.
7.) Long term investing is the most difficult thing to do, which is why most people never become rich. Long term investing entails the patience, knowledge, and risk tolerance to endure gut wrenching corrections. Few are able to do this because they did not accurately gauge their risk tolerance before they invested.
8.) Long term investing is the antithesis of what our society is all about, i.e. instant gratification, greed, and the belief in some holy grail that does not exist. Long term investing is boring, grueling, and is hard work. This makes it an unattractive proposition for most. The goal is to get rich slowly, not quickly, a philosophy which is anathema in our culture.
9.) Stay focused on industry/company fundamentals, and remember you own a business, not a stock. If the business remains sound, there is no reason to sell. You will be amply rewarded when the business model brings incremental revenue/profits to fruition.
And, as always, remember to anticipate the anticipation of others, and that you build wealth by using the power of time, compounding, leverage, and other people's money.
Lowball