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Should You Be Panicking About A Stock Market Crash?
Whew! That WSJ article was published June 7. And nothing really bad has happened.
I don't disagree the market could crash at any time. However, what good is a 3-week old warning? Market could have dropped a lot in 3 weeks and MFO readers would just be getting the warning today. Heck, the Titanic sank in a lot less time. - Added: It appears the intent of the author was to debunk the WSJ warning anyway by essestially debunking technical analysis. Here's the jist of the article - taken from its closing paragraph: "Is correction or a crash coming? Maybe. Maybe not. But you can't tell from the Dow Theory." (cited in the WSJ article)
If a crash were to happen you won't see it until after the fact and if you're holding mutual funds the damage will have been done before you can sell out at the end of the trading day.
What you should be doing is formulating a plan for what you would do in the event of a crash and forming another plan in the event of a market correction. If you're not comfortable holding (investing) what you have now in the event of a crash or correction then adjust your portfolio accordingly now before either event unfolds. Never invest what you're not prepared to lose.
" If you're not comfortable holding (investing) what you have now in the event of a crash or correction then adjust your portfolio accordingly now before either event unfolds. Never invest what you're not prepared to lose."
This, exactly. If you're freaking out today (for example), you need to make some adjustments.
I will say that Puerto Rico's announcement today, combined with Greece AND the continued erosion of the Chinese stock market - does have me concerned.
Current events with Chinese markets and Puerto Rico would added volatility in the near term. Greece sitution is likely priced into the market. Don't think all this will lead to market correction though.
If these news cause lost sleep, you need to review your allocation.
No, you should NOT worry, unless your allocation does not address your own risk tolerance. As for a crash, that seems very unlikely. A correction, however, is long overdue and would be welcome.
Comments
I don't disagree the market could crash at any time. However, what good is a 3-week old warning? Market could have dropped a lot in 3 weeks and MFO readers would just be getting the warning today. Heck, the Titanic sank in a lot less time.
-
Added: It appears the intent of the author was to debunk the WSJ warning anyway by essestially debunking technical analysis. Here's the jist of the article - taken from its closing paragraph:
"Is correction or a crash coming? Maybe. Maybe not. But you can't tell from the Dow Theory."
(cited in the WSJ article)
Regards
If a crash were to happen you won't see it until after the fact and if you're holding mutual funds the damage will have been done before you can sell out at the end of the trading day.
What you should be doing is formulating a plan for what you would do in the event of a crash and forming another plan in the event of a market correction. If you're not comfortable holding (investing) what you have now in the event of a crash or correction then adjust your portfolio accordingly now before either event unfolds. Never invest what you're not prepared to lose.
This, exactly. If you're freaking out today (for example), you need to make some adjustments.
I will say that Puerto Rico's announcement today, combined with Greece AND the continued erosion of the Chinese stock market - does have me concerned.
If these news cause lost sleep, you need to review your allocation.