When the stock market dips, a lot of professional traders buy. As an everyday investor who wants to preserve her hard-earned money, I am planning to park my retirement funds on the sidelines. According to a recent Yahoo Breakout piece, a lot of financial experts have been waiting for the official stock market correction after an incredible bull market run. Weak economic data from Asia and trouble brewing in the emerging markets recently created an equity pullback. I plan to take the advice of experts who suggest only buying specific stocks. I may avoid index funds until the S&P500 dips below 1,750 or even lower.
Waiting for the third bubble to burst
I recently read an interesting article at Max Keiser.com questioning the theory that the bull market will last until 2016. Some people believe this year is going to be the year when the curtain gets pulled back on the Fed's zero interest rate policy or ZIRP. People may realize it's just a lot of smoke and mirrors. Just as the "tech bubble" and the "housing bubble" ended in a stock market crash, the bond bubble could also send stocks spiraling down into the abyss. I'm not an expert on charts or the economy, but I know that the stock market feels like a gambling casino at this point.
Changing my retirement allocations
If I could go back in time before the housing crash and the Great Recession, I'd move my retirement money into a money market until the stock market bottomed out. I can't get excited about investing in mutual funds or exchange-traded funds that are selling at 52 week highs. I'm freshening up my retirement accounts in anticipation of the next great stock market crash. Even if the market doesn't crash this year, I will feel less stressed knowing my money is safe on the sidelines.
Getting my stock losses in order
In my Roth IRA and Rollover IRA accounts, I'm guarding against a stock market crash with stop losses. I check my individual stocks each week to see if I need to adjust the stop loss price to capture some gains while protecting my investment in case the overall market crashes.
A few years ago, I wasn't afraid of another stock market crash. But now I'm beginning to believe reports that we are in the midst of a gigantic asset bubble. In fact, one article by the Wall Street Journal cited an equities strategist who warned there could be a 25 to 50 percent selloff in global stocks in 2014 and 2015. I'm skeptical of the Feds loose monetary policies. Bottom line is that I'm not buying the so-called "dip" because I think it's foolish to show up at a party when everyone is headed to the exits.
More from this contributor:This Time I'm Ready for a Stock Market Crash
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