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April 21, 2014

Andrew Silow-Carroll: Passoverkill? Suggestions to make next year's seders even more culturally sensitive

Sara Israelsen Hartley: Seeking the Divine: An ancient connection in a new context

Christine M. Flowers: Priest's execution in Syria should be call to action

Courtnie Erickson: How to help kids accept the poor decisions of others

Lizette Borreli: A Glass Of Milk A Day Keeps Knee Arthritis At Bay

Lizette Borreli: 5 Health Conditions Your Breath Knows Before You Do

The Kosher Gourmet by Betty Rosbottom Coconut Walnut Bars' golden brown morsels are a beautifully balanced delectable delight

April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

What I plan to do when the market crashes

By Morgan Housel





When you become resigned to the frequency of market crashes (and our tendency to panic when they hit), having an investment plan based on strict rules makes way more sense than flying by the seat of your pants and hoping you act rationally when everyone else doesn't


JewishWorldReview.com | One of the most common questions financial TV hosts ask their guests is whether they expect a pullback or a crash to hit the market. It's an odd question, akin to asking whether they expect summer to occur. Of course summer will occur, and of course stocks will pull back. Since 1928, the S&P 500 has declined 10 percent or more from a recent high 89 times, or about once every 11 months, with just a handful of years escaping a 10-percent dip. Ten-percent pullbacks are almost as common as summers. Twenty-percent market drops have occurred 21 times since 1928, or about as often as presidential elections.

But investing is emotional and the allure of money makes us delusional, so we train ourselves to both think the market doesn't (or shouldn't) crash from time to time, and panic when it does. Few of us are immune to this, as investors claiming to be contrarians outnumber actual contrarians by orders of magnitude.

When you become resigned to the frequency of market crashes (and our tendency to panic when they hit), having an investment plan based on strict rules makes way more sense than flying by the seat of your pants and hoping you act rationally when everyone else doesn't.

So I put together a plan to guide how I invest when the market crashes next.

Say I have $1,000 cash set aside to invest (in addition to an emergency fund). It's opportunistic money. Here's my roadmap for deploying it:

These rules apply to the portion of my portfolio that invests in broad-based stock index funds, since opportunities in specific companies and sectors vary in unpredictable ways during each crash.

Here's my thinking behind it:

I assume the larger the market drop, the bigger the opportunity to invest. I wanted to deploy enough money to take advantage of the "decent" opportunities while still having enough around for the "big" opportunities. The amount of cash deployed peaks when the market falls by 20 percent because that's both a large decline and a historically frequent decline. The market falling 50 percent represents the greatest opportunity, but it occurs infrequently enough that I don't want to earmark a ton of cash waiting for it to happen.

This is a rough guide. It doesn't take into account things like valuation. I'd likely ignore a 10-percent drop after a grossly overvalued market like we had in 2000. And it overlooks the fact that better opportunities may exist in bonds or real estate.

Will I follow this plan to a T? Probably not. But it got me thinking about volatility. Putting these numbers on paper forces you to think about big market drops as opportunities to exploit, rather than crises to fear. It's actually hard to think about these numbers and not want the market to crash. And most important, it provides a guide to consult when stocks do crater, based on a cool-headed analysis of history rather than an emotional reaction to the guy on TV telling me to panic.

Winston Churchill once said, "Let our advance worrying become advance thinking and planning." Wise advice to consider.



THE GREAT RECESSION IS OVER (ON AVERAGE)
The Great Recession began in December 2007. That's when the official scorekeepers at the National Bureau of Economic Research said it began, anyway.

It "officially" ended in June 2009, but everyone knew that was more technicality than substance. The economy stopped plunging around that time, but it wasn't within hailing distance of regaining the ground lost during the financial crisis.

But by one measure, it's really over now.

As of the second quarter, real gross domestic product per capita -- how much the economy produces per person, adjusted for inflation -- is back at an all-time high.

In simple terms, the country is now the richest it has ever been. Ever. In history.

The Great Recession is over.

On average, at least.

Real GDP per capita shows how rich the country is per average person. But the country isn't made up of average people. It's made up of a small group that is doing very well and a very large group is that is still struggling. It's a split economy.

Here's a good example. On Sept. 13, 2012, two news headlines read, "U.S. median income lowest since 1995," and "Ferrari sales surge to record highs." That's the split economy.

We've always had a split economy, but by some measures inequality increased during the Great Recession.

Adjusted for inflation, the median net worths of households in the 90-100 income percentiles increased from 2001 to 2010 -- not by a lot, but there was growth. But for the bottom 90 percent, real median net worths declined.


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The spread between top and bottom income groups has probably grown wider since 2010, since the Dow Jones has surged more than 50 percent and upper-earning households own a disproportionate share of stock assets.

I've interviewed two dozen economists over the past two years, and I ask every one the same question: How long do you think it will be before the median American is doing better than ever? The most common response I've received is literally laughter. Maybe that's a contrarian indicator -- it always looks the worst when things are about to turn. And there are signs things could change. But the America-is-doing-great-while-most-Americans-aren't theme is powerful right now. It's bittersweet in every way.

Sign up for the daily JWR update. It's free. Just click here.

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Comment by clicking here.

Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


The three most important words in investing

Monkeys and investing

Two types of risk, two types of bubbles

The secret to financial success: Use ignorance to your advantage

How to effectively fight investors' greatest enemy

Four mistakes that make everyone a bad investor

Learning from the past, and the Next Big Tren

What newspapers were saying when you should have been buying

Why you never learn from your investment mistakes

The curse of success, and why most mutual funds fail miserably

If you know only five things about investing, make it these

Why spotting bubbles is so much harder than you think

When smart investors do stupid things

The deep downside of home ownership

The biggest retirement myth ever told

He's rich, smart and old: Listen to him

Admit it: No one has any idea what's going on

Gold collapse: The start of something big?

BAD NEWS: EVERYONE IS RIGHT!

Twitter: The carnival barker of investing

Warning: Don't waste your capital being fooled by profit prophets

25 important things to remember as an investor

New paradigm for both drivers and car companies

Biases that make you a bad investor

Nine financial rules you should never forget

Gaining from financial destruction

How to read financial news

Housing: Partying like it's 1925

A rebuttal to student loan horror stories

CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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