The point is, the last few weeks were a time when some risk showed up, and your job is to process it. The temptation is to deal with the discomfort by choosing a prediction. Don't. Your job is to confront the reality of that uncertainty, that you do not know what will happen, and can only make the roughest guesses as to the likelihood of all these scenarios.
Heralds new era! ...
And here's my point: it always feels that way. That's always what a big downturn feels like. It's not a number, 10% or 15%. It's a sense that there's been a break, the ground has shifted, the rules have changed.
Now, the next set of truisms. Nobody knows what's going to happen. No, really. I don't care what the best experts are saying or what the futures do or what happens tonight in Asia.
Wonder how all those people who had been advocating high-dividend stocks as an alternative to boring old bonds are feeling right now?The only sure way to reduce stock market risk substantially is to cut back on your stock allocation. Diversification, fiddling around with different flavors of stock, it's all bandaids. When stocks plunge, they plunge. So the S&P drops 50% and your portfolio drops 46%, big deal.
What we have today is about a 10-15% decline in the S&P over the last month or so, coupled with a feeling of seismic shifts in the financial world. A sense that the earth is moving under our feet. A sense that events are happening that are going to make it into the history books. ....
Nisiprius wrote: Heralds new era! Strong stuff. Let's not argue about whether it's true or not, let's agree that it feels that way right now. Like there's been a turning point, a division between an old era and a new era, and therefore past history is no longer a guide to the future.
And here's my point: it always feels that way.
Nisiprius wrote:Hopefully, you can say "well, yeah, I knew all that. I'd much rather see the market go up and I feel anxious, but I'm able to stay the course."
I seldom post but thoroughly read this forum everyday and I can't tell you how valuable your posts are! I may sometimes skim posts by some but always thoroughly read yours as I know they are always informative/educational. I have no doubt there are numerous others out there who mostly read with little or no participation like myself who also value your contributions. Please keep up the great work knowing you are helping so many people!
Dieharder wrote:The most important thing is to understand and admit that we are powerless to change the course of events that already happened, reducing stocks at this point is sure disaster.
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