You Cannot Time the Market Correction, but Don’t Worry.

The stock market has just hit the longest bull run in its history and it scared people.

A downward spiral seems inevitable, and of course it is. This is how the stock market works. But just because this bullish move has been going on for so long does not mean that you should dump all of your stocks for a safer investment.

If nothing much has changed for you since you made your financial plan – your goals are the same, you are still working, etc. – then you don’t have to do much.

As always, the worst thing to do is try to determine when a correction will occur. But if you think the market crash will stress you out, or if you need to get some money out soon, you can adjust your strategy. Consider:

  • Has your risk tolerance changed?
  • How did you feel the last time the market fell? (This will be 2008/2009)
  • Can you handle a 10 to 20 percent drop?
  • Do you have any goals for which you will need to use your account?
  • Does your asset allocation match your risk tolerance?

If you need to rebalance, you must do so now, before the market crashes and emotions come into play. Retired? You will want to have a decent amount of investment in safer investments so that you are not caught off guard in the first few years after retirement. “Keeping the annual basic living expenses in cash can be useful as a long-term strategy,” writes Tara Siegel Bernard in the New York Times . “This could keep retirees from losing money as they have to sell investments when they fall.”

It’s also ideal to make sure you pay off your debts now so you don’t retire with them and you have another account to worry about.

But these are questions that should always be considered, not just when you think the market will crash. Because none of us knows exactly when it will be.


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