The signs are there....see chart below.
Buy and Hold mantra as perpetuated by mainstream will be the
ultimate trap for the big unwinding that is to come.
We are told that in the long term as charts can tell you, we can survive a crash. Correct. Indices survive the crash and if you hold good fundamental stocks you may survive that too, provided you didn't buy it late and provided the business of that stocks are not impacted in a very large way and provided you have TIME to recover. But all that is not known, individuals are impacted in varying degrees , only indices survive. Still, if the risk probability is getting higher (as exemplified by the chart above) e.g if the forest inferno is getting out of hand and reaching you soon, would you not get out or reduce...
What is actually worse is that the market falls by a thousand knives rather than one big one. If the Big Kahuna happens, we recognise it immediately and we do as necessary. A thousand knives fall may see choppiness/volatility with a downside bias but not big enough to warrant caution...and some people may even buy into it...but could well be the beginning in the lead up to the Big Kahuna. And increasingly, I am starting to think that what we're seeing now is a lead up or a precursor.
My belief is that with today's volatile investing environment, if you intend to Buy Hold and Forget, you shouldn't be in the stock market. Especially if you are the 'buy when everyone is buying' and then paralyse when things start falling and comfort yourself that mainstream says that investing is all about the long haul. So if the probability of ASX falling and rising with a net loss of 15-20% in the next 3 years and then making it back to +10% after 5 years, you'd be saying see I am back in the black, but that's a 2% pa return in 5 years. And that's probably just the indices- your individual stocks may never see the light of day. And when your powder is not dry, you can't take advantage of huge opportunities when the Big Kahuna finally arrives.
....with every passing day, your opportunity to de-risk becomes narrower and narrower. Take care!
Doing Nothing is Doing Something.
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