How to Protect Your Self From a Stock Market CRASH

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How to Protect Your Self From a Stock Market CRASH / Bear Market?

Stock Market CRASH / Correction

We will soon be moving into the window for a stock market correction where I penciled the probable expectations for it to take place sometime between Mid Sept to Mid October, though it could start earlier hence why I was not willing to wait around and de risked ahead of the window.

How much could the general indices such as the Dow drop? I have in mind a drop of somewhere between 15% to 20% as being the most provable outcome, though it is early days, so it could be less or it could a more but 15% to 20% is what I have had in mind for the likes of the Dow for some time.

Whether it will be just a correction and resume it's raging bull market or signal start of a bear market proper is uncertain, probability favours continuation but this is not 2011 when we were in a hated stealth bull market that few took seriously instead now every tom dick and harry thinks that stocks can only go up! And so will assume that buying the dip is a one way bet to stock market riches. Which is why one needs to focus on VALUATIONS! Buy when Stocks are CHEAP! For it allows one to survive BEAR MARKETs and not end up with a 20 year Dead Parrots like Cisco and Intel!

Just as bull markets see stocks OVER VALUED, bear markets tend to see stocks UNDER VALUED. Which is why I am reluctant to buy stocks when they are trading above a PE of 20, as there is little margin for error, a stock on a PE of 20 could during a bear market trade down to a PE of 10! Which means if earnings stay static that's a 50% DROP IN VALUE! Which is why I tend to iterate that my portfolio is thus structured that during a bear market or crash I would be fine with my portfolio falling in value by the worse case scenario of 50%, THAT IS THE RISK OF INVESTING IN STOCKS that most of the Johnny come latelys have no experience of or clue of what could hit them! Investing on margin with their 10% or 20% stops is going to get them…
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