Introduction
It is so easy to understand the article called how to prepare for a recession. I like to gather more information about recession. I think that recession is most important time for me to build wealth and grow rich. Hopefully I can fully take advantage of the coming recession.
How to prepare for a recession?
Here is the article.
Owning bonds is a great way to hedge your risk from that volatility for the part of your portfolio you may need to sell in the next few years.
Facts to read first time
For instance, during the Great Recession, the S&P 500 first fell 20% from October 2007 to July 2008. But unlike the more recent bounce-back in 2018-2019, the market fell another 45% before finally reaching bottom on March 9, 2009. In all, the S&P 500 lost almost 60% of its value from October 2007 to March 2009.
Let me work on those numbers:
Oct 2007 - July 2008 20% drop
July 2008 - March 9, 2009 45% drop
S & P 500 lost almost 60% of its value from Oct 2007 to March 2009
I did sell everything around March 2009, fifteen years lowest time. I just could not believe that I should learn how to invest from 2000 when I started to invest my 401 K and IRA.
Review the statements
Keeping half of your market-crash money ready to deploy in a deeper market correction can serve two purposes. The first and most obvious is that it gives you the chance to take advantage of an even more deeply discounted stock market and enjoy bigger long-term gains when things inevitably improve. The second purpose may be even more important: It can help you manage your emotions and avoid falling into the trap of selling because you think you need to do something.
deeper market correction - what is deeper? 60% drop is deeper
deeply discounted stock market
bigger long-term gains
It can help you manage your emotions and avoid falling into the trap of selling because you think you need to do something.
the trap of selling - understand the trap of selling
What are those two purposes?
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