When a market crash happens, there is a sudden drop in the stock process over a substantial stock market cross-section. This results in a substantial loss in terms of paper wealth. Market crashes are fueled by panic as much by fundamental economic contributors.
According to financial guru Ted Bauman, the current bullish market might not last. He believes that there is a 50 percent chance that the market will continuously increase and a 50 percent chance that it is going to drop to its lowest depth. So what does it mean for investors?
It simply means that it is not the right time to panic but to make a carefully planned strategy. While it does not limit one to make a bold move, it is also the time to make sure that moves are covered in case drastic movements happen in the market. In these times, investors must develop a plan that will work in bull and bear markets.
According to Ted Bauman, it is important to develop three awareness states in looking at Wall Street with three possible reality states. These states are not independent of one another. This means that you cannot choose only one reality state and move on with your choice.
Instead, an investor must know that every reality state is as possible as the others. This way, you will create an investment strategy that is balanced. You will also know what approach to use that will help you gain all the necessary details you need to have.
These three reality states are huge stock market crash followed by an upward leap, developing a balanced viewpoint, and hoping for an increase in long-term interest rates. Creating and following a solid investment strategy is the major key to successful investment. Those who stick with their outlined plans always succeed in a market where most investors suffer failure.
Ted Bauman is a seasoned financial guru and is currently working as an editor at Banyan Hill Publishing. He focuses on privacy, international migration issues, asset protection, and low-risk investment strategies. Ted Bauman writes every week in a daily newsletter and is the brain behind the Alpha Stock Alert.