At
the beginning of a crash if you are still standing profited and if you sense
that the crash is getting severe, you could book profit and wait and watch.
However as time pass by this possibility will diminish and you can do
nothing but watch and keep your cool.However after
you passed the stage mentioned above, I know of no steps which can be taken
during a major 'free falling' and continuous crash; similar to what we
witnessed in May - June 2006. Selling for loss may be an option early during
the crash. However as liquidity dries up you will come across situations
that you cant even successfully place a sell order.
Unable to place a sell order:
There will be times during major crashes that you cant
even sell your shares. This is primarily because your investment is not in
large-caps or so called blue-chip shares which are unlikely to have a
liquidity problem. Hence understand that it is always safe with
fundamentally strong companies. This is not a major concern if your
portfolio has been a very thoughtful one. Eventually your share selections
should rebound and recover.
It is better to factor in long-term volatilities, major
crashes, corrections and
stick to principles than getting caught feeling helpless later. This is
where you need nerve, patience, and an ability not to panic.
Principles; Before getting caught:
