When life is OK, there won't be a need to do anything. There is a saying that goes "If it ain't broke, don't fix it." When things don't go our way, however, then it is time to start acting for a change. As investors, the question we need to ask ourselves is what should we do if an investment does not go our way? What should we do when a stock price moves south?

Take A Deep Breath One of the first thing investors need to do is to calm down and take a deep breath. Do not panic. The news are already out and stock price has been adjusted accordingly. Panicking over yesterday's news will not do you any good.

Read The News. Keep Reading There must be news available on the internet concerning the company's stocks. Does management just announce a massive layoff, a product recall or an earning miss? As you read these kind of news, please keep in mind about the long-term implication it might had on your investment. For example a company announcing earning shortfall due to widespread flooding might not be as consequential as if competitors release a new type of products rendering your company's product useless.

Assess The Financial Damage Once you know the full scope of the news, you can then assess the potential damage caused by the news. Oftentimes, stock price will move due to extraordinary events which might not occur for another ten years! This has no impact whatsoever to the earning power of your investment. If the recent news had an impact on your company's earning potential, you should then adjust your fair value of your common stock accordingly.

Compare With Current Price The news had been revealed and I am sure stock price had been adjusted accordingly. If stock price plunged significantly while the longer term picture remains intact, you can then hold on to your investment. If fair value of the common stock change dramatically, then you should consider selling your holdings.

In all these steps however, it always pay to remain calm while making your investment decisions. You will never help yourself by making rash decisions at this point. The sudden turn in your stock price would not surprise you if you have done careful due diligence when you determine the fair value of your investment. As a precautionary move, investors can invest in stock that is valued 50 % below its fair value. That way, when a stock price unexpectedly turns south, we are well prepared for it.

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