We all know one of the main reasons the market falls and rises is sentiment, however. we must be careful not to fall into this trap, it’s very easy to start investing based on sentiment and begin to ignore our own rules we have been using for many years, especially when the market is falling, as we know it always falls faster than it rises.
Think about it, why when there is a market sell off do almost all companies fall, no matter what sector they are in or how good their fundamentals look for the past 10 years, they still all fall together, the companies performance has not changed in a few hours, but the market sentiment certainly has and that’s enough to drive most stock prices down, I fully appreciate that market sentiment does drive the market, but it’s not what drives the good companies to perform well in the longer term.
We all have our rules and should adhere to them all the times, don’t change your rules on market sentiment, invest through the sentiment and only buy or sell if the stocks technical or fundamental data has actually changed per your rules, then take appropriate action.
Good luck to all investors.