I am not going to bury the leadership. Another stock market is about to crash.
I know this is not because stocks are overvalued (although they probably are) or because COVID cases are steadily increasing, or because the federal government compromises on more financial relief, or one of about a dozen other reasons Seems unlikely to do.
I know this because the stock market crashes always Come. In fact, only in my lifetime, I have lived:
- Crash of 1987, when S&P 500 Lost more than 30% of its value within only 40 days
- Dotcom’s bubble burst when S&P fell more than 44.7% in the early 2000s
- The financial crisis of 2008, when the market shed more than 50% of its value in a year and a half
- Coronovirus accident
And I’m only in my late 30s.
But despite the fact that I am 100% convinced that the market is crashing again, I am not worried about my investment or the plan I am putting into the market. And, if you did the right thing, you shouldn’t do it. Why here
You can’t predict a market crash, but you can be ready for one
Although no one ever knows when a market crash is about to happen, everyone should know that it can happen on any day.
In fact, crashes often occur as a result of burst bubbles, so everything can look like it is moving. Actually Well (or real estate) with the stock market – suddenly before… it is not.
Since you cannot predict when an accident will occur, you must be prepared for one at all times. This does not mean keeping your money out of the market, because you need to invest in stocks to make money. Instead, it means:
- You should not invest money in the near term. Some recoveries occur very quickly (including the most recent). Others may take years. If you have money invested that you will need within the next two to five years, you may not have time to wait for the market to rebound and you may be forced to sell if you lose. You do not want to do this.
- Not trying to time the market. After knowing what is going to happen, it is impossible not to try to buy at Rock Bottom or sell at peak. Instead, invest for the long term and consider using dollar-cost averaging to regain your position. This means investing the same amount of money in similar assets at regular intervals, so chances are good that you will buy some shares at a higher price and others at a lower price, and things will go out as well.
- Pay attention to your risk exposure. Investing more in equity is a risky endeavor, as it is likely that you will suffer external losses during a market crash. At the same time, no investment Bus The stock is risky because you will miss out on the chance to earn a reasonable return. Take time to think about what balance is right for you.
- Not chasing short term profits. If you want to be prepared for a market crash all the time, your portfolio may not include any investment that you are unhappy to hold for years – just when you are in an accident you are with them yourself and you They need to be kept until recovery to avoid locking in damage.
- Assessing what type of investor you are. It is difficult to beat the stock market consistently – especially in times of turmoil. While it was easy for most people to make money during 2010 when market volatility was low, these are very uncertain times. If you are a nervous investor to react in fear, or do not have a sound investment thesis, investing in index funds may be a better bet than individual stocks. An S&P index fund is continuously invested at any time. If you have owned it for at least 20 years, it is taking very little risk in case of an accident, if you choose to, So all but definitely your investment will recover any loss over time.
If you take these five steps, you can involve me in knowing that you are 100% ready for a market crash, whether it is today, tomorrow or in five years.