The stock market has been booming of late. But amid the happiness that accompanies swelling account balances, there is also the nagging anxiety among many investors that the good times won’t last.
There is always the possibility that the bull market will come to an end, whether through the bang of a big downdraft or the whimper of a slow, steady fizzle. Maybe not right away, and maybe in some way we can’t foresee.
A Cooler Look
To be sure, no one, save for the few investors riding massive short positions, wants stock prices to go down. But rather than dwell on the prospect of a possible 10%, 20% or a who-knows-how-bad loss, let’s take a breath and look at the possibility of a downturn a bit less emotionally.
First, there’s the whole issue of real versus paper losses. Consider the current boom. On paper, you’re richer. But unless you’ve sold out and converted all those gains (minus taxes) to cash, you’re in the same place you were before the rise. The only time you know if you have really made money or lost money is when you sell your holdings.