Kate,
real bear markets don't involve quick falls and recoveries, they are miserable grinding affairs.
Stocks will experience
a real bear market, whether or not that began on Friday, only time will tell.
That's not to say I will not get back into 100 % equities in the future (perhaps after a correction even if not
a real bear market) but the fact there hasn't even been a 1 - 2 % down day for months seems like the calm before a storm.
I don't think a lot of investors even know what
a real bear market is.
And in
a real bear market, virtually all stocks drop together.
That way, you will be capable to invest in the bargains that
a real bear market will produce, and not leave the investment game disgusted at yourself for losing so much money.
The basic idea behind the two pieces is this: sure, we're at average valuation levels now, but in
a real bear market values can get cut in half from here.
Carefully consider your exposure to stocks, especially if you have never been through
a real bear market like in 2008 - 09, or the 2000 dotcom bust.
We do even better if you include
a real bear market, which we haven't even had in the last five years.
One's true risk tolerance can be hard to gauge until having experienced
a real bear market with money invested in the market.
Real bear markets have duration and humiliate, making weak holders conclude that will never touch stocks again.