OT - How I look at it.
Please do not respond to this post on the board as it is really off topic. (Please respond off-board if you have something that you really want to say to me about it). I’m posting it because some who are new to this kind of abrupt drop may find some reassurance in it:
The last day of July, July 31st, roughly two months ago, was a Tuesday. I especially remember it because on that day my portfolio hit an intra-week low of up 43.6%, which was down a rather scary 11.1% from its high of the year of up 61.5%, just seven trading days before. (1.436 divided by 1.615 = 0.889 = down 11.1%). And yes, having your portfolio drop 11.1%, from up 61% to up 43% is scary!
So what did I do? Sell and raise cash? No, not much of anything actually.
As I said, that was a Tuesday. By that Friday my portfolio was half-way back at up 52.0%. It passed that previous high of 61.5% by the middle of the next week. By mid-August, a month and eleven days later, I was looking at a portfolio that was up 96.2% on the year. Note that’s up almost 35 points more than the prior high of up 61.5%, and up almost 53 points from than that low I was so scared about.
Now, my portfolio has “dropped” to up 74.9%. Sounds scary, but that’s down just 10.9% from August’s high of up 96.2% (same kind of calculation), and is still way ahead of the previous high (up 61.5%), much less the previous low.
Now, it may bounce back right away, it may continue on down, it may stay about where it is. I don’t have a clue, and neither does anyone else, no matter what they tell you. The “end-is-here” people were sure in July. In fact they were sure in February of 2016, when tech stocks took a big sell-off, and every sell off since. You wouldn’t believe all the people that showed up out of the blue that February, to tell us to sell everything and get into cash because all of their charts and technical indicators said the market was going to crash.
But remember that eventually the market will have a major sell-off. It has to happen eventually, so keep enough cash to cover any expenses you might have during a sell-off, and keep more if you are retired and living off your investments.
Meanwhile, I am invested in good companies that I have conviction in, and I think that they will do well in the future.
Hope this helps,
Saul