Fearing a repeat, they've stayed on the sidelines by keeping their money in cash. They missed out on the great bull run of the past six years. Now that stocks are at all-time highs and look somewhat expensive, these investors are understandably even more scared to get back in. Sure, they suffered steep losses and likely lost some serious sleep as stocks cratered during the financial crisis.

Yet they also enjoyed a dramatic rebound in U.

How to deal with losses in the stock market | Inquirer Business

It's very hard to gauge the stock market peak, but it's equally hard to get the low point right. If you're going to take your money out of the market, you also have to know when to get back in. Recovering from the Great Depression: Even those who bet on America right before the Great Depression would have made their money back eventually.

Understanding the Math of Recovering from Losses - Degrees of Financial Literacy

That's obviously an extreme example. During less scary market meltdowns like in the s, the recovery time was far less. Cash holds risks too: It may be tempting to stay on the sidelines. However, holding too much cash for fear of a market crash "will almost certainly cause you to miss extended periods when markets perform well," Freedman wrote. Just look at the past few years.

Of course, it's important to note that this analysis isn't saying put all of your money in stocks. Investors have different risk levels and different time horizons -- young investors have decades to go, retirees probably don't. For older investors, making their money back within a few years could be the difference between being able to retire or not.

Why this tech party isn't like Timing the market is near impossible: Younger investors don't have that excuse, but it's hard to blame Millennials for fearing another crash. For many, it's almost all they know. During the early s, the Nasdaq crashed as the Dotcom bubble popped, taking the rest of the market down with it. Just eight years later, the Wall Street financial crisis fueled an even scarier plunge in stocks. Start your day right with the latest news driving global markets, from major stock movers and key economic headlines to important events on the calendar.

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The Importance of Cutting Losses Short - Cabot Wealth Network

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