Reply to My issue with stock market bubble fears

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[quote=Anonymous][quote=Anonymous]Market rise and fall. If you are in the market for the long-term, even a big crash isn’t gonna kill you. That’s what I don’t understand. Everyone talks about the market crashing, but if it’s crashing from being so high, and you’ve been in it for a long time then you’re still always gonna come out ahead. So what’s the problem?[/quote]

We have now gone a decent stretch with no real market downturn - and when it did go down, like Jan-Feb this year, it quickly climbed back up again to record highs.  This has caused many people to drift into having too high a percentage of their assets in stock funds.

Many people believe they have a risk tolerance that is higher than they actually do.

Many people freak out when they actually see their investment balances declining.

Many people end up needing their "long-term" savings earlier than they expected.

In the middle of a crash, nobody knows where the bottom is.

There absolutely will be another multi-year crash.  Nobody knows when.

None of this means we are in a "bubble" now, but it does mean that people are not dumb to be diversified, even if it means they are earning lower returns than if they were fully invested in stock funds.

If you were really not worried at all, you should be fully invested in uncovered call options.

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