Bracing for Another Market Crash

            <strong>Bracing for another market crash

The markets have made quite a comeback this year. But is it too much too soon?

NEW YORK (Money) — Question: I’m very worried that we may see another stock market correction. Since the market low of early March, my 401(k)’s value has risen 77%, which seems like an awfully large jump. So last week I moved the majority of my investments into bond and money-market funds, although I did leave 50% of my international holdings intact. Do you think I jumped too soon? –Rick G., Corona, Calif.

Answer: I don’t think the question is whether you jumped too soon, but whether you should be jumping at all.

I agree that the magnitude of the market’s rebound this year, while preferable to further declines, can also seem a little unsettling. And given the fragile state of the economy’s recovery — we’re still losing jobs and the housing market continues to face challenges — it’s certainly possible that we could experience another dip in stock prices in the near future.

That said, I don’t think the right way to deal with this uncertainty is to move your money in and out of the market based on a hunch about the direction stock prices may or may not take in the short term.

Why? Quite simply, your chances of being able to make such calls correctly on a consistent basis — which is what you’d have to do for this approach to work — are pretty slim. There are just too many constantly shifting variables that go into setting stock values — corporate earnings prospects, inflation expectations, investor sentiment, etc. — for you or anyone else to be able to predict short-term market movements with a high degree of accuracy.

I realize that you probably see your decision to move your dough as being well-grounded in fact and reason. But if you step back and examine it more closely, you may find you’re not being quite as coolly rational as you think. Just on the basis of the information you provided above, I have at least one question about your reasoning: If it’s the sharp rise in stock prices so far this year that’s sent you scurrying into bonds and money funds, why did you move only half of your international holdings? After all, foreign stocks, as measured by the MSCI EAFE index, are up about 20 percentage points more so far this year than domestic shares.

In short, far from making informed investing moves, it seems to me that people who shift their money around to capitalize on market upswings or sidestep downturns are really playing a guessing game. And that’s no way to invest your retirement savings.

What do I recommend instead?

Well, I say you’re better off creating a diversified mix of stocks and bonds within your 401(k) and, aside from periodic rebalancing, largely sticking with it regardless of what the market is doing. This way, the equity portion of your portfolio will allow you to participate in the long-term growth the stock market has to offer, while your bond stake can provide a cushion during downturns.

The key to this strategy is setting an appropriate mix. Generally, that means a higher dose of stocks when you’re younger and have more time to rebound from setbacks, and moving more to bonds and cash as you near or enter retirement and have to be more careful about preserving your capital.

To get a better idea of what mix might be suitable for you given your age and tolerance for risk, you can check out the target-date retirement funds offered by Vanguard and T. Rowe Price.

You can also see how different blends of stocks and bonds might perform by going to Morningstar’s Asset Allocator tool.

One final note:Diversifying your portfolio among a variety of asset classes won’t generate the highest gains or totally immunize you from losses. Over the long term, however, such diversification should allow you to earn returns large enough to grow a decent nest egg, and do so without subjecting you to outsize risk.

If nothing else, you’ll definitely be better off than you would be by continuing to engage in the fruitless exercise of trying to exploit the market’s ups and downs.

Posted in Odd News, Odd Stuff & News, Off Topic, Uncategorized and tagged , .

90 Comments

  1. Greetings from Los angeles! I’m bored to death at work so I decided to check out your site on my iphone during lunch break. I enjoy the information you provide here and can’t wait to take a look when I get home. I’m amazed at how quick your blog loaded on my phone .. I’m not even using WIFI, just 3G .. Anyways, fantastic site!

  2. how to use yohimbe with viagra
    <a href="https://viaonlinebuy.us/#">purchase viagra</a>
    what is a natural alternative to viagra?

  3. I’m curious to find out what blog platform you happen to be working with? I’m having some minor security problems with my latest site and I would like to find something more risk-free. Do you have any suggestions?

  4. can i take viagra with energy drink
    [url=https://viaonlinebuy.us/#]generic viagra[/url]
    viagra how many millagras should i take

  5. what happens if you take viagra and dont need it
    <a href="https://www.v1agrabuy.com/#">buy viagra canada</a>
    viagra street price

  6. what online doctor sites prescribe viagra
    buy viagra online canada https://www.v1agrabuy.com cheapest viagra
    what is the right amount of viagra for a 74yo male

  7. how much viagra to take first time
    cheap viagra generic https://www.v1agrabuy.com/ generic viagra online
    tricare viagra limit

  8. why does viagra cause headaches
    <a href=https://www.v1agrabuy.com/#>buy cialis online</a>
    how much does viagra cost at walgreens

  9. why does the military provide viagra
    <a href="https://viaonlinebuy.us/#">viagra for sale</a>
    how to avoid viagra facial flushing

  10. is cialis cheaper than viagra
    cheap viagra https://viaonlinebuy.us viagra buy
    doctors who prescribe viagra online

  11. when does viagra come off patent
    cheap viagra https://viaonlinebuy.us buy viagra
    how long before viagra starts to work

  12. Its such as you learn my mind! You seem to understand a lot about this, like you wrote the ebook in it or something. I feel that you just could do with some % to drive the message home a bit, however instead of that, this is wonderful blog. An excellent read. I will certainly be back.

  13. how viagra was discovered
    herb viagra for sale
    which of the following is a side effect combining nitroglycerin and viagra?

  14. brand viagra discount
    <a href="https://viaonlinebuy.us/#">levitra vs viagra</a>
    can i get viagra over the counter quora

  15. Ahaa, its pleasant conversation regarding this paragraph at this place at this weblog, I have read all that, so now me also commenting here.

  16. viagra portland oregon tienda
    <a href=https://viaonlinebuy.us/#>does viagra work?</a>
    viagra how long erection last

  17. 20mg cialis vs 100mg viagra
    [url=https://trusttnstore.com/#]viagra prices[/url]
    mom fucks son to help get rid of his viagra boner

  18. viagra pharmacy prices
    Bridgeport Family Pharmacy https://trusttnstore.com/ viagra pills
    what does viagra for pre workout

  19. first time i took viagra
    cialis online http://freeurlredirect.com/3ks8c official statement
    how does viagra affect male organisms

  20. can you get viagra without a prescription
    rxtrust pharm https://jtbtigers.com/3f0rj cialis prices
    which is better for lowering blood presseue viagra or cialis

  21. Howdy! I simply wish to offer you a big thumbs up for the excellent info you have here on this post. I’ll be coming back to your blog for more soon.

  22. how to buy viagra in fort lauderdale
    viagra buy https://shorturl.ac/6uffm viagra buy
    herb viagra green box side effects

  23. how long does a viagra pill last
    <a href="http://freeurlredirect.com/3ks8c#">buy generic viagra</a>
    statins and viagra

  24. how do i block viagra emails
    [url=http://www.microlink.ro/a/10hkl#]generic viagra[/url]
    buying viagra without a prescription

  25. how much is viagra or cialis viagra femenino precio
    generic viagra 100mg tadalafil tablets https://lmeed.com/ viagra dosage
    asia viagra without a scripture

  26. viagra like supplements
    viagra without a doctor prescription from canada cialis price https://edzssl.com/ generic viagra trusted pharmacy
    where can you buy viagra for women how many pills come with a typical viagra perscription

  27. viagra from canadian pharmacy
    cialis price generic viagra trusted pharmacy https://aviib.com/ cialis 5mg
    what is best sex position using viagra where to buy pills like viagra

  28. diy viagra
    viagra erection online viagra without subscription https://lmeed.com/ sildenafil 100mg tablets female viagra pills
    what is the female viagra how long does it take for female viagra to work

  29. viagra online reddit
    viagra on line canadian viagra without a doctor prescription https://edphrm.com/ buy viagra online canada pharmacy sildenafil side effects
    liquid viagra for female

  30. how to increase the effects of viagra forhims com viagra cost
    cialis tadalafil generic viagra 100mg https://edzssl.com/ tadalafil tablets
    when was viagra invented

  31. when is generic viagra available in us how much did the us military spend on viagra
    generic cialis at walmart buy viagra https://edzxc.com/ viagra for men
    how is work viagra sex

  32. how do i know i viagra is working
    viagra online pharmacy https://goeedl.com/ www.viagra.com herbal viagra
    pumpkin seeds natural viagra niacin instead of viagra

  33. viagra for female cialis viagra online
    generic viagra online pharmacy https://edjass.com/ sildenafil generic cialis canada
    how to treat viagra overdose

  34. why does viagra cause headaches
    tadalafil generic at walgreens cheap cialis https://ingogf.com/ cialis online generic tadalafil
    where does viagra spam come from what is the difference between male and female viagra

  35. what does viagra cost in mexico guy takes viagra
    sildenafil 100mg tablets https://cialisdendi.com/ female viagra pills generic sildenafil
    how long do friction burns viagra take

  36. does tricare cover viagra
    buy sildenafil citrate 100mg online https://goeedl.com/ viagra 100mg
    what class of drug is viagra

  37. what would happen if i took viagra before bed? how much viagra can i take at one time
    viagra https://edphrm.com/ online pharmacy viagra sildenafil citrate generic viagra 100mg
    viagra an pain meds on line

  38. <a href=http://tea-cofe.com/nacionalnie-recepti-chaya/sekreti-yaponskogo-chaepitiya.php>buy viagra from canada
    </a> <a href=http://stankom.ru/?q=taxonomy/term/64&page=26>buy viagra online from canada
    </a> <a href=http://allmetallurgy.ru/promyshlennye-roboty/1024-vozvrat-tolkatelya.html>where is the cloest place to buy viagra
    </a> <a href=http://aks-clocks.ru/903.html>female viagra flibanserin buy where
    </a> <a href=http://tourminal.ru/RegionRecreationAbout?id=102>buy viagra online paypal
    </a>

  39. [url=http://www.bakanavtiki.ru/katalog/kofe/SEF_%D0%BF%D0%BE,%D0%BF%D0%BE_%D0%B4%D0%B0%D1%82%D0%B5_%D0%B4%D0%BE%D0%B1%D0%B0%D0%B2%D0%BB%D0%B5%D0%BD%D0%B8%D1%8F.html]buy viagra inline
    [/url]
    [url=http://radom.kz/ru/catalog.php?id=909&ids=105]can you buy viagra online in canada
    [/url]
    [url=http://barkasik.ru/viewtopic.php?f=5&t=301&start=40]best site to buy generic viagra usa
    [/url]
    [url=http://sferateplic.ru/sport/ia-togda-s-rafaelloi-possorilsia-a-vot-eta-devyshka-iz-bostona-priletela-dve-nevesty-akselia-vitcelia.html]where to buy viagra in nyc
    [/url]
    [url=https://dog-forum.ru/storozhevye-porody-sobak-top-10-s-foto-i-nazvaniyami-storozhevye-porody-sobak/]buy viagra in mumbai
    [/url]

  40. free female viagra samples
    free viagra samples https://cialisdendi.com/ canadian pharcharmy online viagra viagra online canada pharmacy
    free female viagra samples buy viagra online usa

  41. original viagra <a href=https://viagraalexandria.com/>generic viagra canada</a> 100 mg sidenifil equals how much viagra? viagra 25mg tablet viagra triangle

  42. when does viagra go generic in usa viagra commercial model <a href=https://debviagrals.com/>generic viagra vs viagra</a> what are th eingredients of viagra? is there a difference between female vkagra and male viagra define viagra pills

  43. dog ate viagra viagra pill usage <a href=https://nancyedpharm.com/>teva viagra cost</a> how to know if a guy is on viagra when will viagra be generic in the usa what would happen if a kid takes a viagra pill

  44. what was the first drug like viagra <a href=https://trustgenericstore.com/>what are the effects of a child taking viagra</a> viagra guy how to spot fake viagra pills

  45. viagra or cialis which is stronger google generic viagra <a href=https://debviagrals.com/>viagra results</a> how long dies it take before viagra starts to work how many milligram a viagra is safe to take for man weighing 240 pounds

  46. viagra use with vacuum pump how to get viagra or cialis <a href=https://nancyedpharm.com/>coupons for viagra printable</a> viagra for womens where to buy when is viagra going generic viagra without a doctor prescription nz

  47. <a href=http://www.hi-computers.ru/web_design_money_admin_site.php>where can i buy viagra on the gold coast
    </a> <a href=http://bar-starymelnik.ru/Vrazhdebnaya-sreda-obitaniya/Konec-raznoobraziya>buy viagra online pharm24
    </a> <a href=http://game-edu.ru/v-marta.php>where can i buy viagra in chennai india
    </a> <a href=http://vkusnagam.ru/p_vp_2585.html>where did you buy your viagra
    </a> <a href=http://www.disserstation.ru/DISS2005/4-3.htm>buy viagra online usa no prescription
    </a>

Leave a Reply

Your email address will not be published. Required fields are marked *

Human Verification: In order to verify that you are a human and not a spam bot, please enter the answer into the following box below based on the instructions contained in the graphic.