Investing
6 Incredibly Smart (and Easy) Steps to Take Now in Case the Recent Selling Turns Into a Crash
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The “buy the dip” financial news networks teleprompter readers, and the 30-year-old portfolio managers that have never seen a market crash are getting pretty quiet these days. Market veterans and “hey boomer” professionals have seen this show before. Back in 1987, the Dow Jones industrial average plunged a stunning 22% in one day. The equivalent today would be a drop on the venerable index of almost 7,800 points.
During the period from 1929 to 1932, the stock market plummeted a remarkable 83%, and many lost everything they had. Much of that debacle was due in part to frenzy-driven novices buying stocks on margin. Sound familiar? That late 1920s stock mania and crash ostensibly started the Great Depression, which really only ended after the United States entered World War II in 1941.
In the years from 2007 to 2009, during the height of the mortgage and real estate collapse, one that brought us dangerously close to yet another depression, the market dropped a huge 57%. When stocks finally bottomed at an ominous intraday low of 666 on the S&P 500 on March 9 of 2009, that put in the floor for the longest bull market in history. That bull market may be coming to an end, and perhaps doing so fast.
So where do we stand now? Very possibly on the precipice of a very large potential decline. Why? Because the Federal Reserve’s benchmark interest rate, known as the federal funds rate, is now expected to rise this year as many as four times. Toss in the ongoing two-year fight with COVID-19 and its multiple variants, supply chain issues and the biggest jump in inflation in 40 years all weighing on investor sentiment, and we could be in for some difficult times in 2022.
At 24/7 Wall St., we feel that there are some especially important items for our investing readers to consider now. The six highlighted here make sense for those looking to take some proactive portfolio moves in front of what could be a far more difficult 2022.
Stocks always have been the best investment idea. Look at any long-term chart for the major indexes and you will see a 45-degree angle. Now, that rise may have some major dips, like the 35% decline we saw in 2020 in a period of about six weeks, but overall, equities will always remain the best bet, especially quality companies that pay dependable dividends.
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