Stock Market Crash Ahead? Should You Care?
The chart above says it all - everyone is always hopeful that the stock market has found a bottom after a sell-off. After the crash of 1929, it took almost four years for the market to finally find a bottom. If you look at the chart below showing the last five years (beginning with the sell-off in 2008), the bottom seemed to arrive quickly and then the money printing started. One could argue that the market hasn't really found a bottom yet from the most recent downturn and today's 205 point loss could just be the beginning of another significant downturn (as some are now predicting).
I don't advocate having more than a 20% exposure to the stock market at any time. While you may miss out on good times, in bad times and periods of significant volatility, you won't risk being completely wiped out by a stock market crash. If you follow the principles of the Financial Fortress, your focus will be where it should be - cash flow, proper diversification and risk management.
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