If you have played blackjack, then you likely recognize the terms “stand” and “hit.” But, when you are talking with a financial advisor near me and trying to figure out what to do with your stocks, what do these terms mean or look like? Let’s take a closer look.
“Stand”- In blackjack, you stand when you either feel that you will beat the dealer’s hand, or if you worry that you will bust. Most professionals say that the “buy and hold” strategy is the most effective; if you buy a stock, keep it, even through upswings and downfalls.
The biggest problem that people have is that they panic when they see their stocks decrease. The thing you need to remember is this is not necessarily a bad thing! If the stock is moving with the market and/or with the stocks of other companies in the same area, it should not be a huge concern. Selling stocks out of panic is why the stock market crashed in the 1920’s. Another reason you should hold is because it makes things a lot more complicated then they need to be you may end up paying extra fees.
“Hit”- In blackjack, you hit to make your number higher, therefore increasing your chance of winning. Although buying and holding IS a good strategy, don’t expect to hold forever. Some stocks will bottom out at some point, costing you a lot of money. In the same way, it may seem like common sense, but if you suspect a business is going under soon, that’s probably a good time to sell.
Talk with your advisor to learn about what it is that you should do and work with them on your investments. That way, you’ll get the best results and get the most for your investments in the long term.