STREET DOGS: When to sell
There is one tipping point that you should know better than the rest — your personal selling point
From Nick Maggiulli Of Dollars And Data: There is one tipping point that you should know better than the rest: your personal selling point. What do I mean by this? Consider your current net worth (all of your assets minus all of your liabilities). What number would your net worth have to reach, as a result of a market crash, for you to give up all hope and sell your equities? I ask this question because I used to believe that there was no number at which I would give up hope and sell stocks. Markets always recover, right? At least in the US this has been true. But, as I thought about it more, I realised that there is some psychological number in my head at which I would not be okay. After doing a simple calculation (tipping point/current net worth – 1) I realised that I would need to see a portfolio decline of 63% across my total portfolio before I truly panicked. With my current allocation this would require ~70% decline in stocks to occur. Given this has only happened once in US h...
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