Many investors panic and sell when they see their stocks losing money resulting in lower profits.  Why? Because they are buying when the markets are good and selling when the markets are bad. You should really only make changes to your portfolio if there has been a fundamental change to your investment.

Some examples of a fundamental change include negative news about the company (fraud, management changes, declining earnings), a negative change in government regulations or the industry itself being disrupted by some new technology. 

You want to understand what is truly changing with your investment and to filter out the short term fluctuations. Doing your research prior to making an investment minimizes the risk of you panicking or making a poor decision.  

The graph below shows you KLCI Bursa’s performance since 1994. Over the last 28 years, you can see an overall improvement in Bursa’s performance. 

Source: Yahoo Finance

But if we zoom into a specific period say 2007 to 2009, you’ll see it looked like the KLCI Bursa was doing pretty badly.

Source: Yahoo Finance

Say you had decided to take your money out on 1st January 2008 when the markets were doing badly, you would have made a loss or made less money than you could have since the markets rebounded quite soon after. That’s why it’s so important to be patient.