Historically, the current bull market is one of the longest, so it is normal that you will hear and read that soon will come a fix. Yet, thinking in this way is wrong.
The bull market will not die of old age
A bull market does not die of old age, in the sense that it is not written anywhere that it should run out within a maximum number of years.
It’s true, the last bull market we’ve had, that of 2003-2007, lasted less than five years.
But in the past it was not always so. In 1948-1957 there was a bull market lasted nine years, and the same happened in the 90s.
Not only that, but in the 90’s even in the last stage there was an acceleration. In the first 4 years, the S & P500 index rose by 60%, but in the remaining five years the increase was as much as 232%.
Who was released after only four years thinking that the bull market was already lasted too, he would have lost the opportunity to triple the capital.
Do not miss the bull market for fear!
Do not make the mistake of going out from the stock market out of fear of “possible” markdowns. Since no one can foresee the future, nothing says that after nearly eight years of rises must necessarily begin a bear market. And, in any case, there are several ways to protect the profits achieved to date. Here are the two main methods …
1 – Adjust your asset allocation: If in these years you have not done movements, it is likely that after the increases that we have had since 2009, your stake has increased too. In that case, they sell some action in order to bring your asset allocation to its original level, or at a level consistent with your risk tolerance.
2 – Use the “trailing stop”, or “stop-loss dynamics”: On each stock certificate, set a stop loss if you have not already done so, for example, -10% from the current price. If the title salt, dynamically updates the stop loss upward. This way, if there are other hikes do not lose them, but at the same time when a correction will come at the most, you’ll lose 10% of the current value. The stop can be greater or less than 10%, but not place it too close otherwise risks to sell all following a minimum correction. Stock markets fluctuate and even your securities must have the ability to recharge the spring to further increases before being sold.
With these devices, you will enjoy the benefits of the bull market, without the anxiety of constantly wondering if we got to the end. Because a bull market does not die of old age.