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I have a friend who's an engineer. As a result, he thinks that he's got everything covered, including his investments. For the most part, he does – so he doesn't often ask for my input.
But there's one area that he hasn't planned for. You guessed it: a bear market.
When the first wave of the coronavirus selling hit, he came to me.
He asked simply, "Should I have a bear market plan?"
I asked him whether he has a plan for retirement; he said he does.
So then I asked, "Well, why wouldn't you have a plan to take care of anything that might get in the way of that retirement?"
"I don't know… because things happen, and I can't stop them."
Bingo – the answer everyone gives.
"Things happen, and I can't stop them…"
But they're wrong.
Having an insurance plan for your portfolio is just as, if not more, important than any protection you'll have.
Many people had to delay retirement after the 2007-2008 crisis. But still, most people try to ride out a bear market. They get nervous about selling too soon or buying too early.
It's not about getting the timing exactly right. It doesn't have to be complicated.
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.