A year ago, this week, the shortest bear market hit a record low.
Shares lost 34% of their points of sale from Penthouse on February 20 to March 23 in just 32 days. At that time, the coronavirus was growing from anxiety to epidemic, and as a result, the economy was going from anxiety to crisis.
The unexpectedness of that bear market makes it easy to forget. So, too, is it almost 75% of the profits that the shares have experienced since?
Investors who have pushed the market out of the darkness of the March 2020 downturn should bring good luck, but they should squeeze hard to remember the pain, as it is not the time to forget how much the downturn hurts bear markets.
As the economy recalls the level of the pandemic, there must be plenty of fuel to keep the rally afloat or at least to avoid a long-term reversal, although experts say that could change when the market adopts a new regime, which is likely to happen next year. :
At the same time, the stock market seems to be spinning, from the time when the rally was led by megapixel brand giants, from the hottest tech stocks to the days when small companies, stocks, international investments, and so on. the load will do in portfolios.
You’ve seen some of them in recent market activity with the Dow Jones Industrial Average և S&P 500 indexes, both flirting with record highs this month, while the tech-laden NASDAQ Composite has suffered mostly from bad days.
“Rotation” is an interesting term because it has different meanings for professionals and individuals. For professional investors, this means that another market segment is coming to the fore. For investors, it means: “You are going to suffer if you do not diversify.”
As the market has shrunk, not just over the past year, but since the 2008 financial crisis, investors have moved away from some fundamentals. You do not need to go deep into Google search to find the details of how diversification has stopped working, how value investment has been lost, how the technology boom will never end վերջ more.
You can also find rumors of a lot of bubbles, experts say, bubbles are blowing around GameStop, Bitcoin, daily trading volumes, retail demand պահանջ big recovery.
Some investors have moved away from tried-and-true old school methods that relate to new school events.
It works until something happens.
But individual investors should not worry about bubbles or investment philosophies either. They did not have to guess which parts of the market were going to heat up or worry about what was going on in the cooler.
Instead, they must stick to their basic, long-term plan, which usually means ignoring instability, having a diverse portfolio that transitions from large capital companies to small, low-cost deals to hard-nosed growers, from home countries to international stops, and so on. ,
The one-year anniversary of the end of the bear market – the anniversary of the launch of the new seed market – is worth focusing on.
This is difficult to do, as the bearish 33-day market of 2020 was followed by the fastest return after a 30% drop in the stock market history, and rapid returns are now expected.
After last year’s big fight, the stock market recovered in just five months. For comparison, in 1987 the stock market fell by about 34%, which was determined by the accident on Monday, but new rises were not achieved in 20 months.
Recovering from an epidemic would not be so optimistic if the stock market were still struggling to achieve it.
When the next significant free fall occurs, the standard but worthless advice will be “Do not panic now,” as if there is just the right time to panic.
If you do not want to face the potential for panic, what you are doing now will allow you to breathe easier the next time you suddenly fall և slower recovery than expected otherwise you can breathe.
Here are the steps to consider.
1) Draw your winners, take some profits. If the market has rewarded you beyond your expectations, block some of your profits.
You do not go out, you do not give up or you try to set things in time, you just make some profit, you keep the profit.
2) Examine your plan for where changes are guaranteed.
Numerous studies show that investors with a plan are much more comfortable with their progress, better able to withstand all market conditions, but plans and distribution of assets change over time. If, for example, the last 75% profit over the last 12 years of the coupled market has pushed you beyond savings forecasts, you can afford to make more conservative investments. If it does improve your sleep factor, it’s a plus.
Whether you need to be more conservative, better diversified, more focused on making a profit, or more, this is the time and place to make those decisions as a factor in the distribution of your assets.
3) Take the money from those winners և apply according to plan.
This completes the recalculation process, but it is easier to do if you think you are “planning” than “selling your winners and buying your losers”.
The latter is possible. You may be investing in your backlog of investments to get them to your target allocations, but don’t think about it in terms of winners or losers as much as preparing your portfolio for the next one.
At some point, that preparation will pay off. At the same time, you may not get the same amount of profits, but you should get the income you actually planned.
After all, that’s the goal to achieve the most, no matter what the stock market does.