What happens if months go by without a 10% correction?
March 16th, 2007 Written by wahmbrenda
In this case, risk will remain high. Unfortunately, nobody can tell how long it will take for the day of reckoning to arrive. So, you cannot afford to stay out of the markets. Instead, you should find where you can get solid returns back whenever you take reasonable risks. This means that you need to stay invested for several reasons:
- As mentioned earlier, nobody knows when the day of reckoning will be. Instead, maybe the main consequence of what is going on right now will be a period of lower than historical returns on stocks.
- You do not even know if there will be a day of reckoning. The markets may simply sink slowly into a mire of higher interest rates and higher inflation.
- More than likely, this reckoning is not going to look anything at all like what you expect.
Of course, it is a lot easier to say that you want to find investments with above-average returns and below-average risk. Luckily, you can know where to look for this by looking at the recent 5% sell-off in the market. You will find some stocks have held up surprisingly well for reasons that you will only be able to figure out in retrospect.
