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M*: What We’ve Learned From 150 Years of Stock Market Crashes

WABACWABAC
in Other Investing
Bless their hearts, they put this timely piece above the fold today: https://www.morningstar.com/economy/what-weve-learned-150-years-stock-market-crashes

You'll be glad to know they eventually end:
Still, even if you are looking down the barrel of the next Great Depression, history shows us that the market eventually recovers.

But since the path to recovery is so uncertain, the best way to be prepared is by owning a well-diversified portfolio that fits your time horizon and risk tolerance. Investors who stay invested in the market in the long run will reap rewards that make the turmoil worthwhile.
Sure sounds easy don't it?

Comments

  • BenWPBenWP
    It does sound easy, @WABAC. Except that I also remember how I felt in 2008 when we needed to sell a house.
  • JD_co
    At least we can see the train coming towards us this time.

    A black swan event, by definition, is random and thus difficult to predict and prepare for. We have had time to prepare.
  • WABACWABAC
    edited March 7
    Today my wife mentioned the following AP story to me: If you're thinking about selling your stocks, you might want to think twice

    I explained to her that we are only selling the winners in our IRA. We aren't locking in losses. We remain in widow and orphan funds so long as they do well. We remain invested in our taxables, with healthy cash cushions besides. So if everything goes right, we won't be missing out on much.

    What these anodyne articles aren't mentioning is the potential impact of an international trade war. The tariffs under discussion aren't just on steel and aluminum. And they aren't just on one country. We aren't talking 2018 tariffs, we're talking 1929 tariffs.

    In addition to considering the usual, and varied, factors and data points surrounding market valuations and business cycles, we must now take into account the announced intentions of politicians and technocrats to remake entire markets according to their desired outcome.

    And what I see out there is considerable uncertainty discerning the intentions of the guy in charge. While some people see the uncertainty as the sign of an unparalleled negotiator, others say maybe it's time we start paying attention to what the guy says he wants to do.

    Be that as it may, my wife and I must ask ourselves if we trust the politicians and technocrats to steer the markets to their desired outcome without piling up on the rocks, grounding on the shoals, or going to anchorage to await further directions. Then we must ask whether this exercise will be of any near-term benefit to our retirement accounts given the precarious status of Social Security.

    The following is a cartoon from our last trade war with Canada:

    image

    Elbows up.
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