We all like common stocks, but in this stage of the economic cycle we should also be defensive. Therefore, it’s a perfect time to discuss Chapter 5 of Benjamin Graham’s book The Intelligent Investor – The Defensive Investor and Common Stocks.
The topics we’ll discuss today are:
A stock market crash is always around the corner.
In the last 18 years, we’ve seen two crashes of 50% and if you live in the Netherlands, you still dream of those 2000 highs. Nevertheless, a 9-year bull market quickly erases all the painful memories.
But forgetting what happened and how it looked is dangerous. If you haven’t lived through a stock market crash, you should at least try and think about it in order to be prepared as much as you can be.
Introduction
Dollar cost averaging might sound like a good thing for a novice investor, and it is, but don’t forget that the sophisticated investor can also use the strategy.
Many novice and non-sophisticated investors don’t want to invest outside of the U.S. and when it comes to stocks, they just want to own a few of what they think are the best stocks. For those investors, the best strategy is to dollar cost average. More →