There are many lessons to be learnt from the GFC (Global Financial Crisis) of 2008+,
or in fact from any financial crisis that hits the markets periodically.
And some lessons are very pertinent for investors and traders.
Here is the list of Brainy's 10 Key Lessons from the Financial Crisis
for the benefit of investors and traders.
We could also call this: "Sensible Investing in a new age"
A lot of people were suffering from the economic downturn in 2008-2009 - the so-called Global Financial Crisis (GFC). Perhaps an understatement for some people. And many people continued to suffer for some time afterwards. For many, their pending retirement was put on hold as they returned to the work force.
But it is important to remember that even though the share market bears that demolished share prices might hibernate for a while, those bears are not far away. They can potentially return with very little warning and put another huge hole in our investments.
It is very important to Beware the Share Market Bears! If you know the warning signs, then you can guard against the potentially significant impact when the share market bears do strike again.
But what are the warning signs? There are clues in the ten lessons outlined below.
The first version of these notes were prepared in early 2009, delivered as a public presentation, renamed "Beware the Bears!", and massaged and revised into the current form.
The material is also available in the presentation slides from a public presentation, and will soon be available in an updated booklet format. See the details at right.
In spite of the GFC!...
a lot of people saw this financial crisis coming,
But ... how did they know?Take heed of the Ten Key Lessons below, and all is revealed.
May I wish you the best of luck
More information and downloads
The latest presentation slides from the public delivery of presentations on this topic are available from Robert's: Presentation Slides web page
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This could also be called: Beware the Share Market Bears!
Lesson #1 - The buy-and-hold strategy has expired!
Lesson #2 - Priority one - Preserve the capital!
Blue chip stocks are not safe havens and may not maintain their capital value. Capital-protected products exist, but their effectiveness can be questionable - be sure to read the fine print and understand the costs of the capital-protection guarantee. Keeping a falling investment just to receive the dividend income stream might not be as good as liquidating the asset and redirecting the capital to another investment.
For share market investments, consider using a Stop Loss approach to preserve capital, and prevent it's deterioration.
Lesson: Priority one - Preserve the capital! Consider selling a falling investment in order to protect the investment capital.
Lesson #3 - The Big Picture - maintain the perspective
Don't get hung-up by
the short-term news and noise in the markets - it is very distracting.
Also beware of the arbitrary baseline dates that are used to measure and report on performance (eg. year-to-date, or this quarter). These can be very misleading. Step back and look at more realistic scenarios and time frames (eg. from market peaks, and troughs).
Lesson: Remember the big picture to maintain perspective.
Lesson #4 - Markets, stocks, property all run in cycles
Lesson #5 - Stock market corrections - they happen more often than we care.
Lesson #6 - We can "time the market"!
Lesson #7 - Financial advisors, brokers, bankers.
Don't forget that the
finance industry professionals provide
advice because it is their job. And if the advice is not sound, it
won't affect their take-home pay, nor their own
it comes to financial advice, your own financial advisor might not
be 100% right, 100% of the time. Sometimes a second opinion can be
Lesson: Don't believe absolutely everything that you hear. Healthy scepticism is, well, healthy.
Lesson #8 - Leverage - beware!
Lesson #9 - Chart reading can be very useful.
Lesson #10 - Risk/Reward - Understand and respect it
The information presented herein
represents the opinions of the web page content owner, and
are not recommendations or endorsements of any product, method, strategy, etc.
For financial advice, a professional and licensed financial advisor should be engaged.