Many people stop investing precisely because the stock market goes down.
Psychologists have shown that most of us do a very poor job of predicting today how we will feel about an emotionally charged event in the future.
Because so few investors have the guts to cling to stocks in a falling market, Benjamin Graham insists that everyone should keep a minimum of 25% in bonds. That cushion, he argues, will give you the courage to keep the rest of your money in stocks even when the stocks stink.
One advice given is that you should not place 100% of your security portfolio money in stocks unless you....
1. have set aside enough cash to support your family for at least one year.
2. will be investing steadily for at least 20 years to come.
3. survived the bear market that began in 2007.
4. did not sell stocks during the bear market that began in 2007.
5. bought more stocks during the bear market that began in 2007.
6. have read chapter 8 of Graham's Intelligent Investor (human psychology emphasis).
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