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. Â After the crash of 1929, it took almost four years for the market to finally find a bottom. Â 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. Â 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. Â 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. Â If you follow the principles of the Financial Fortress, your focus will be where it should be - cash flow, proper diversification and risk management.
Related articles
