December 17, 2018

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How to Respond When the Market Turns

How to Respond When the Market Turns
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Many investors received a nasty reminder in early October: that they could lose a lot of money in a very short time.

Stocks fell for six consecutive days, reversing the gains of a third quarter that had been remarkable chiefly for its lack of stress. That October shock may have been just a blip in a long bull market, but it pointed out that American stocks clearly can’t rise forever. What is a long-term investor to do?

Our quarterly survey contains some lessons and suggestions. Prospecting for stocks in other countries is favored by some strategists now. Buffering stocks with bonds — and taking advantage of the higher interest rates available in shorter-term securities — is widely recommended. Of course, staying calm and sticking to a plan — as many index fund investors do — is always in fashion.

In a new book and interview, the investor Howard Marks explains why most people can’t beat the market. And if you’re worried about climate change — and want your portfolio to reflect your concerns — we’ve got some ideas for you.

For entertainment, try John Schwartz’s essay on the profit-making possibilities in mind-altering drugs, which he, personally, doesn’t use. But, he says, “Some people might benefit. Shouldn’t it be our humanitarian goal to make money off them?”

The extended bull market has made stocks fairly expensive in the United States. For investors capable of handling the stress, neglected foreign markets may offer better prospects, according to some — though by no means, all — strategists.


Renewable energy funds can’t shutter a coal plant tomorrow, if that’s your goal, but they can pair profits with a commitment to a green economy.


Somebody is going to get rich from legal, psychoactive drugs linked to blockchain technology, our columnist says. Why not him?


A decade after the financial crisis, multiple Federal Reserve rate increases are at last making it possible to earn a decent yield with little risk.


Fund investors often earn less than they could because emotions get in the way. People who use index funds seem to make fewer and better choices.


Focused investing can be risky, but growth stocks and high-conviction bets helped propel three mutual funds to outsize gains in the third quarter.


After a deep decline for funds that invest in energy infrastructure partnerships, it could be time for a turnaround.


Want to risk trying to outsmart other investors? Start by understanding where we are in the market cycle, a Wall Street veteran says in a new book.


A successful professional investor says most people aren’t able to beat the market. So, he advises: Understand your limitations and act accordingly.



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