Protecting capital in a market downturn

ONE of the most common mistakes made by retail investors is the failure to protect their capital in a market downturn.

They tend to hold on to their stocks in a market downturn, thinking that it is just a correction and hence that the market will rebound.

Many financial advisers have also advised investors to stay invested during a market slump as volatility is usually just noise. They point out that investors tend to sell out during market lows and fail to get back to the market just when it recovers.