Should You Sell Everything Now to Avoid a Stock Market Crash?
Why timing the next crash is a dangerous game
“I just sold everything to avoid a stock market crash.”
This is a refrain I’ve heard from time to time over the last few years.
As the bull market continues to push higher, investors are wondering if a stock market crash is coming and some have defensively moved their cash from the market to the sidelines.
The thinking goes like this: “Maybe not today, maybe not tomorrow, but sometime soon the stock market just has to crash and I don’t want to be invested in stocks when it does.”
At first, this logic makes sense. If it seems like stocks are overvalued or there is an upcoming economic threat on the horizon, why not jump out now and avoid the crash?
Let’s dig deeper to see if “jumping out early” is a good strategy.
Get Out Before a Stock Market Crash?
A stock market “crash” can be defined as a “correction” (a 10%+ decline in market prices from a recent high) or a “bear market” (a 20%+ decline in market prices over a two-month period).
So here’s the basic question:
