Market up 400 points; how are you preparing for the crash?

by Manshu on September 13, 2010

in Opinion

The market went up by 400 points today, and there was cheer all around with plenty of analysts predicting 20,000 by the end of the year, 22 by the end of next year, so on and so forth.

But no one knows what’s going to happen. No one ever did, and no one ever will. It is natural for people to be optimistic and cheer for the market when it’s going up, and be pessimistic and all gloomy when the market is going down.

That’s just how things are.

During the peak of the recession, and much afterwards there was a lot of talk about protecting your portfolio from a crash, looking out for the next bubble, the Greek crisis,  and generally stuffing your money in your pillows, but all that is slowly receding now.

As the tide turns people are looking to get more adventurous, looking for that penny stock that will rise 10 times, the IPO that will scorch on listing, and the gold bar that’ll surely triple in three months.

The market moves in cycles, so don’t let its positive momentum numb your senses and make you throw caution out of the window.

What goes up eventually comes down. Of course, I don’t know when the crash will come, but I do know that a lot of people will be blinded by it when it eventually does.

Personally, when the market goes up and away – I try to remind myself that this is just part of the natural cycle, and not get too carried away by it. It becomes quite hard when everyone around you seems to be making a killing on the penny stock their brother in law recommended, but when you’ve been through the cycle a few times, and burned your fingers, it is easier to ignore the noise.

All the best.

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