We have a lot of new investors in the stock market since the pandemic. A recent Charles Schwab survey revealed that 15% of U.S. stock market investors started investing in 2020 after the COVID-19-induced market crash and have less than 18 months of experience in the market.
These investors only know one way: straight up at a rapid speed!
But at some point, all of these new investors are going to find out that stock market is not just a one-way road and can go down, often distressingly fast. A bad 18 months for a stock-only portfolio could see 50% of your wealth wiped out. These new investors are going to learn not only to value a very well diversified stock portfolio with high-quality companies and not just the “next best thing” but also a proper asset allocation in various asset classes.
Most of these, often young “investors”, do not know yet that the reality is that you need a well diversified investment portfolio built to let you sleep at night when stock market crash or turn into a longer term bear market.
Sven Franssen