This is why some of us believe in a balanced portfolio, including stocks (both US and foreign), cash, with some added spice of gold, commodities and some selected short positions (e.g. the dollar), plus for me … even a dash of real estate.
Some of us have been around long enough to know there are plenty of ways to be wrong about the markets. And timing is the toughest thing to be correct on.
Real estate and cash holdings helped me get through the stock bust of 2000-2003. Foreign stocks, shorting the dollar, and cash will probably help me get through the current bear market in real estate. If you have balance, you don’t have to be right every time.
For example, knowing that real estate was overvalued in 2003 didn’t do you much good if you cashed out and tried to short at that time. Same goes for following Greenspan’s irrational exubberance advice in 1996 and shorting the overvalued stock market all the way to the poorhouse. Sure he was eventually right. But timing is critical to all-or-nothing positions.
