“When the dot-com bubble burst in March 2000, the Nasdaq fell nearly 78% from its peak,” writes William Goetzmann for the WSJ in “Financial Bubbles Happen Less Often Than You Think.” “Many of the era’s highest fliers plunged more than 90%, and vast swaths of dot-coms disappeared. The ones that survived, though, helped spearhead a radical tech revolution that is still changing our economic, personal, and social lives today.”
His sub-head reads “Bubbles and market crashes make for great horror stories. But research shows how rare they are—and that the consequences aren’t all bad.” Really? Tell that to an investor who may have retired before the crash. This is coming from The Edwin J. Beinecke Professor of Finance and Management Studies at the Yale School of Management.
The problem with financial history is you just don’t know how you’re going to feel in the future. How are you going to deal with a market crash? Make sure you have an idea before you realize your risk tolerance was, in fact, an intolerance.
Action Line: When you want to talk about risk in your portfolio, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
P.S. The dot-com crash was one of the three deadliest markets this century. You can see the damage they caused in my table below. Prepare your portfolio before you’re a victim of the next crash.
Originally posted on Your Survival Guy.
