Anticipating a Second Market Collapse
The doomsday investors and prognosticators are out in full force. They are predicting another collapse of the markets. I am concerned, of course, as I am in the retirement home stretch. There are plenty of theories for why we should expect more bad news.
There is also the recent pattern of extreme market correlation in which every class of equity investments rises and falls together. This is a big problem for the so-called stock picking geniuses, of which there are actually none.
So what should the more rational investor do in times like this? The market is now swinging upward, yet again. What if this is a last gasp rally before the negative predictions prove correct? I’m going to ride it up but limit our downside with trailing stop loss orders on our major equity holdings. Our new money will continue to flow into non-equity classes, reducing our exposure.
What about you?