It is hard to imagine the stock market going down after the last 10 years of continuous annual gains. But what if that changes? The future is not always like the past, but it may be a good idea to be prepared for major disruptions to markets. Many economists see some warning signs. Some are even pointing to Apples recent $1 Trillion market cap as an ominous sign.
Wait! I thought the stock market always goes up 200 points each day? It doesn’t? So the DOW plunged 1,600 points at one point a few months ago, the worst intraday point drop in history. First of all, only half of the population owns any stock, so half the population does not really care directly what the market does.
Money Vikings are not worried about this at all, here is why:
1. Balanced. If you are balanced among different asset classes in accordance with sound risk management principals, then over the long run things smooth out. We like the Ray Dalio and Warren Buffest strategies for this, but please see a financial fiduciary professional for your own unique situation and risk tolerance. Mr. Dalio says an “all weather” portfolio consists of 30% stocks and the rest balanced among bonds with small amounts of gold and commodities as a hedge.
2. Your debt is low. If you are living a low debt, low cost lifestyle, then you are not at huge risk if/when things in the economy take a dive.
3. Buying opportunity. What a great opportunity to pick up some of your favorite stocks at a discounted price. If you like sales on clothes and electronics, then you should like sales on shares of companies. If you are working away each month and plowing money into a 401k or IRA, you now get more shares, awesome!
Go Money Vikings and conquer!