As the World Health Organization (WHO) first identified the unknown disease coronavirus on 31 December 2019, it announced an official name COVID-19 on 11 February 2020.
In the interest of public health, both WHO and CDC recommended social distancing measures and lockdown. As a result, the personal-finance of many peoples across the world was heavily affected, and the COVID-19 hit the global economy.
This was a big strain on the financial market. Most of the stock investors didn’t know how to deal with the downfall. Although it was not possible to avoid the loss completely, it was possible to manage the risk to some extent. But some simple mistakes caused massive losses to many investors during the pandemic.
5 Investing Mistakes That Cause Loss during Pandemic
The effect of the pandemic is still there in the financial market, and it will remain for a long time. So you need to learn about the following mistakes and avoid them that caused loss to many investors during the pandemic.
- Liquidating Positions
- Obsessing for a Negative Value in Portfolio
- Depending Only on Income Stocks
- Taking Eyes Off from the Market
- Trading for Every Breakout
Although you can manage the risk to some extent, you can never eliminate the risk. One of the best ways to manage your risk during a pandemic is to diversify your portfolio. You can add up some alternative investment assets like gold or bitcoin. You can invest in bitcoins through Bitcoin-union
Anyway, let us look at the above points in detail and how to avoid them.
One of the biggest mistakes was liquidating all the positions. Even though the market is going through a tough period, selling off all your investments and buying it later is not a good idea.
So it does not make any sense to sell-off your positions at a lower price now and enter the market at a higher price once the dust settles. Invest in potential sectors such as essential goods or services such as groceries and video conferencing industries to stand out.
Obsessing for a Negative Value in Portfolio
No doubt that many investors had negative value in their portfolio due to the pandemic, more specifically for short term investors. However, obsessing over it and making emotional decisions can become more serious mistakes in the future.
Even if there are high volatility and the downfall of the market, planning for the long-term is the key. Without obsessing for the negative value, diversifying your portfolio with potential opportunities now Is the key.
Only Investing in Income Stocks
Investors got good dividend incomes from many companies before the pandemic. But investing again in those companies with the hope of getting dividend income can be a mistake. So only investing in dividend stocks can be a big problem during the pandemic.
Taking Eyes off the Market
Due to the pandemic, the market was quite volatile. So it is a good opportunity for short term traders. However, it is important to keep your eyes on your investments and put stop-losses accordingly as some events, and negative news can have a great impact on the price of stocks during this period.
Trading on Every Breakout
Breakout is a good strategy for short term traders. Due to increased volatility, it has become a good opportunity for traders. But trading on every breakout is not a good idea at this crucial time. The breakouts could be trade traps.
Nobody knows when the market will return to its normal position. However, identifying long-term investment opportunities at this period is the key. As the volatility is expected to remain for some period, it is a better opportunity for traders too.
Taking care of the above mistakes can save you from losing money in the market. Digital assets like Bitcoin, Ethereum, and other popular altcoins are also good options for investment during this period.