By now you will probably be immune to my constant warnings about the current pricing of equities, instead you will be basking in the warm glow of the increase in value of your investment and pension portfolios.
Today marks the anniversary of an historic stock market event. Who could forget “Black Monday” when in 1987 the stock market experienced a drop it had not seen in nearly 60 years?
In fact the market dropped so severely that most investors believed that it would keep dropping until all of their money had gone, quite naturally they panicked and sold out at the low point of the market. That reaction is called the Behaviour Response and that is who the majority of investors will never match investing professionals.
Have we learnt from past ?
Remember that severe under-performance occurs in times of market turmoil and IF YOU SELL at that point then there is a very good chance that when you choose to step back into the market, you will have little chance of getting back in at the same low price you sold out at.
If you read my last blog then you will be aware that there is a high market alert on global stock markets and that my advice was to trim your exposure to equities.
Typically investors are extremely adverse to loss, preferring to make small profits rather than a big loss. So your natural reaction to any adverse market fall will be to SELL SELL SELL.
If you wish to trim your portfolio do so now, don’t wait until the market collapses!