This is the third in the series of what I learned from the 2008 stock market correction. Have you ever noticed how easy it is to NOT pay attention when the value of your assets is increasing? You glance at the statement smile and then hopefully file the statement. Then you notice that things were not quite as good this month as last or maybe you don’t really notice until a few of months have passed because it was summer holiday or some other reason. Then it seems as though suddenly the market takes some huge drops! Now everyone is paying attention. It is important to pay attention in good times as well as bad.
Let’s also consider that anyone paying attention to the over zealous lending situation in our country for several years knew it had to end in a less than ideal scenario. As I have written before I knew when the bank offered to loan in excess of what I believed to be the true value of my home this could not continue with good results for the economy. Such feedback regarding the economy can lead to better investing decisions. It can lead to proactive steps to see what happened the last time that real estate became overvalued. What sectors of the stock market suffered the most other than real estate? As always following the rules of asset allocation and a cash cushion of 6 months living expenses minimum on hand is more important than ever during market downturns but anticipated corrections lead to huge opportunities. Be sure to simply pay attention.