In a bull market, be prepared for appearance of the bear.
Do a stress test on your portfolio. Assuming your portfolio value drops 20% (not uncommon) or 50% (a rare event), what will be the effect on your financial health and mental well being.
Tactical asset allocation is rarely possible except at the extreme of the stock market. In 1995 to 1996, I was bearish as I was of the opinion the market was too bullish and high. In 1997, I was bullish when the market declined precipitously. The prices dropped lower than my buying prices before they climbed up again. In 2005, I was bullish in the stock market and could pick up bargains. I did not see the market as too high in 2007. In 2008, the market corrected sharply. At end of 2008, the market was obviously very low during the collapse of Lehman; fear was at its maximum. This was the point of capitulation. In 2009, the market was cheap but I did not buy in early 2009 but did soon after. Tactical asset allocation is possible but at the extreme of markets and this is only obvious a few times in your lifetime of investing.
In any case, value investors welcome the tsunamis in the stock market.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
calvintaneng
56,633 posts
Posted by calvintaneng > 2018-10-09 20:03 | Report Abuse
https://www.youtube.com/watch?v=kfr8dqusBBM