You may have noticed it’s been a pretty good year for stocks. Good news, right? Well, it’s all good news until it’s not. With valuations this high, it’s important to gauge your future expectations.
Case in point:
“When valuations were this high in 2004 and 1997, the next decade delivered after-inflation gains of 4.5% both times, despite enormous market crashes along the way,” writes James Mackintosh in the WSJ.
The question is, to me at least, how many stock investors were able to stick around and patiently stay invested when things got nasty?
What I want you to consider in the above quote is, how did you feel when the markets fell apart in the tech bust and the real estate crash?
Did you sell your stocks?
And if you didn’t sell, will you be able to do the same in the next crash?
At some point in your investing career, you need to ask yourself how much will stock gains improve your life?
And how much will stock losses ruin it?
Be honest with yourself.
