BEN CARLSON: It's time to take stock ahead of the inevitable market downturn
Baseline for a bear market shouldn't be a huge meltdown
The stock market has been going gangbusters for a number of years, so it is easy to forget that bear markets are still possible. These don't come around on a set schedule, but over the past 70 years or so they've occurred every four to five years, on average. Although investors can't predict when the next bear will strike, they should work through potential scenarios to be prepared when the inevitable downturn begins. Here are six questions to think about before the next bear market. How bad will things get? We've witnessed two of the largest market crashes in history in this century alone, so you should forgive investors for assuming stocks will get cut in half every time they go into bear market territory. History tells us enormous market crashes are rare. Since World War 2, there have been 15 bear markets. Only three produced losses exceeding 40% and there were three separate downturns in the 30% to 40% range. That means stocks fell no more than 30% two-thirds of the time. In fac...
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