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Prepare Now for a Bear Market

Written by Staff Writer

BearMarketNoBullHow to Think About Stocks and Bonds in a Bear Market -Wall Street Journal
"Being surprised at equities’ ups and downs is like visiting Chicago in January and being shocked by 8 inches of snowfall. Similarly, when you invest in stocks, be prepared to occasionally lose a large pile of money....Staying the course when the sky turns dark requires a more systematic approach, and being able to execute it depends almost entirely on one’s frame of mind. How do you get to that healthy place in your mind? Your psychological investment overcoat is the fundamental equation of happiness: Well-being = Reality minus Expectation....

The lower your expectations, the better you will feel when things head south, and the better you feel the more likely it is that you will see your strategy through....So, my advice is to mentally vaporize 75% of your portfolio, and when the crunch inevitably transpires, you will be psychologically well-prepared. In investing, to paraphrase the redoubtable Yankee catcher, psychology is destiny."