When bull markets are in full swing, everyone's a long-term investor.
But when the market begins to 'correct', 'crash', 'fall' or 'nosedive' then suddenly our investment strategy is called into question. Then we begin to doubt ourselves and bad decisions can be made.
With the S&P/ASX 200 (INDEXASX: XJO) down over 6% in just one month, I can all but guarantee there are many investors out there, who are doubting themselves.
The ASX has been pushed down by a selloff in the big banks, miners and supermarket giants.
Even telco giant Telstra Corporation Ltd (ASX: TLS) hasn't been immune.
Telstra, which is often considered one of the safest stocks on the market, has fallen 4.5% in just one month, as investors decided what to do with their money.
However pinpointing the exact reason behind the market's vicissitudes, is anyone's guess and long-term investors should never base a sell decision on volatility.
So is Telstra still a safe bet today?
As noted above, Telstra is often considered one of the safest blue chip stocks on the market. However following a spectacular rise in share price from 2011 (when it traded as low as $2.70) till now, I believe its shares have become somewhat pricey.
Now, that doesn't mean Telstra isn't the fantastic business it was yesterday but as seasoned investors know, no stock is a buy at any price.
Shareholders must be willing to accept some volatility in Telstra's share price and make provisions for when prices do drop. However I believe Telstra's dominant position in many markets – such as mobiles, fixed broadband, pay-TV and more – combined with huge profit margins and free cash flows, will enable it to grow into a stronger and more efficient business over time.
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