“Every man I meet wants to protect me. I can’t figure out what from.” – Mae West
Stock market participants for most of the past few years have eschewed protection. It was all about making large amount of gains. Almost every advisor lost clients from “cocktail party” conversations about who had made the most money recently. We heard of retired clients that were not satisfied with only 10% to 20% gain a year. They would withdraw money from advisory account to speculate in technology stocks. And then, of course, there was the cryptocurrency craze.
Well, all of that has ended with a splat! We have entered a bear market (defined by a 20% drop from the high-level mark) according to most market indices. The technology sector declined 24% in less than two months. Energy stocks have been massive losers with losses of over 30% over the same period time. I don’t think I have to describe what has happened to bitcoin and its brethren.
What can we learn from 2018 and what do we see for 2019 (at least the first part of it)?