Chapter 13Dealing with Risk
In light of the 2008 market meltdown, your first reaction (as well as your second or third) might be to swear off stocks and maybe even bonds forever, deciding to keep your money in federally guaranteed certificates of deposits and money market funds instead. This is understandable. When the Dow Jones Industrial Average falls nearly 34%, which is still substantially better than the performance turned in by the S&P 500 and NASDAQ, it is only natural to start rethinking things.
However, it’s important that you take the right amount of risk at every stage of your investing career. If you take too little risk in your portfolio, you will never accrue enough to meet your goals. On the other hand, if you take too much risk, ...
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