When the market crashes ...

[umfundi]

Once again, Mike Piper provides blinding insights in a few hundred words.

http://www.obliviousinvestor.com/what-t ... t-crashes/

In particular, if you need to sell in the face of a crash, should you have been there in the first place?

He says,

(Of course, one could make the case that this investor shouldn’t have had so much in stocks to begin with. But that’s a separate discussion.)

I look forward to that separate discussion.

Keith

[ObliviousInvestor]

Thank you for linking to the article, Keith. And thank you for the article suggestion as well.

[RadAudit]

Once again, Mike Piper provides blinding insights in a few hundred words.

http://www.obliviousinvestor.com/what-t ... t-crashes/

In particular, if you need to sell in the face of a crash, should you have been there in the first place?

That's a heck of a way to figure out your risk tolerance was lower than you thought it was. Hopefully there are other criteria that you might want to consider concerning what your risk tolerance ought to be before the horse leaves the barn.

I would guess that can you pay your bills no matter what the stock does is a good place to start. Betting that your asset allocation has inversely correlated segments and one area will be up while the other is down and we'll muddle through some how may not work in a crash where all correlations go to one.

[Call_Me_Op]

I would guess that can you pay your bills no matter what the stock does is a good place to start. Betting that your asset allocation has inversely correlated segments and one area will be up while the other is down and we'll muddle through some how may not work in a crash where all correlations go to one.

Very unlikely that all correlations go to one - unless you are referring to correlations of risk assets.