Most of us have heard that stocks have outperformed bonds in the long run. But what is the definition of long run? So far this century, have stocks really outperformed?
I’ve filled out more than a few risk-profile questionnaires over the years. These forms are supposed to measure how much investment risk you’re comfortable with, such as what percentage of your portfolio should be in risky stocks versus low-risk bonds. Every questionnaire I’ve ever done has pegged me as a living-on-the-edge kind of guy who should have between 70 percent and 91 percent of my money in stocks or stock funds. And that’s the problem.
Just about two months ago, on Oct. 15, the headlines read “ Market Freak Out” as the Dow Jones Industrial Average “ plunged.” Headlines warned “ Why the selling is just getting started.” Fear had returned to the market.
The headlines read “Stocks Plunge” and “Why the Selling Is Just Getting Started.” It’s enough to get anyone scared and ready to exit the market. Before you do, consider the following:
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