LAST WEEK, I TALKED about some of the unsettling trends in the financial markets. In that article, I focused on the role of brokers and day traders, and noted that it takes two to tango. But it turns out the dance floor is quite a bit more crowded than that.
Yes, brokers and day traders are doing their part, but there’s another set of actors who are less visible but a whole lot more influential.

IN HER MOST RECENT book, former Secretary of State Madeleine Albright quotes Mussolini. “If you pluck a chicken one feather at a time,” he said, “no one will notice.”
Don’t worry, I’m not veering into political commentary. But when I heard this quote, it brought to mind what we’ve been seeing in the financial markets this year. Taken individually, there’s nothing that strikes me as a clear red flag. But taken together, the current environment looks a little bit like a chicken that—all of a sudden—seems to have lost a whole lot of feathers.

I CAME ACROSS a statistic so surprising it was hard to believe: During the recent market downturn, according to Fidelity Investments, approximately 15% of investors sold all of their stock holdings. And among investors age 65 and older, nearly a third sold all their stock market investments. It was a discouraging figure, meaning that large numbers of people had picked exactly the wrong time to abandon their investments.
Fortunately, the figures were corrected a few days later.

MEGA-CAP TECHNOLOGY growth stocks were huge winners during the last bull market and even during this year’s coronavirus crash. But recently, they’ve lagged, while small-cap value companies have posted robust gains.
Indeed, after a decade of lackluster performance, diversified portfolios that contain sizable holdings of foreign, small cap and value stocks have started to perk up. Could mean reversion finally be taking place? Are we at an inflection point?
It could be—or it could be just another twitch in the market,

EVERY YEAR, WHEN spring rolls around, investment folks trot out a favorite catchphrase: “Sell in May and go away.” This is based on the idea that the stock market lags during the summer, as people go on vacation.
While it may sound hokey as an investment rule, it’s hardly the only one. There’s also the January effect, which says that stocks do better just after the new year. Its cousin, the January barometer, stipulates that the market will have a good year if it has a good January.

MANY INVESTORS endured their first stock market crash this year. But what if you’ve never before invested in stocks? How do you know what your risk tolerance is—and how do you keep yourself calm?
There are no easy answers. Questionnaires aren’t a great way to find out our risk tolerance. They ask us about hypotheticals when we’re calm, but we act and think differently when the storm hits. Instead, the only sure way to find out our risk tolerance is to weather a storm or two.

WHEN I WAS A TEENAGER and bathroom walls were the equivalent of today’s Twitter, you’d often read that “100,000 lemmings can’t be wrong.”
It turns out that the bathroom scribblers were misinformed and that lemmings aren’t, in fact, given to mass suicide. Still, the scribblers’ confidence in the wisdom of crowds was spot on. If 100,000 lemmings did indeed commit mass suicide, there would likely be a good reason.
Which brings us to today’s stock market.

THIS SHALL PASS—just not as quickly as any of us would like.
I’m talking about the bear market, but the same sentiment applies to both the coronavirus and the economic slowdown. Indeed, the three are inextricably entwined, with share prices the twitchy indicator that tells us the mood of the moment.
Amid the swirl of news—the latest fatality count, the unemployment claims, the Dow’s daily action—it’s easy to get unnerved and start second-guessing our investment strategy.

IT’S A SCARY TIME to own stocks. But for long-term investors who want their portfolio to clock significant gains, there’s simply no alternative.
To be sure, you could throw in your lot with the market-timing crowd, who are currently hiding out in bonds and cash investments. Their plan: When we get the final climactic plunge in share prices that sends the market back to valuations not seen in four decades, they’ll swap into stocks and ride the next bull market to astonishing wealth.

ON WALL STREET, there’s a story—apocryphal, I suspect—that’s told about an old trader, a young trader and the 1962 Cuban missile crisis.
Old trader: “They say this could lead to nuclear war.”
Young trader: “So we should buy bonds, right?”
Old trader: “No, we should buy stocks. If we don’t get war, the stock market will rally. And if we get a nuclear war, it won’t matter what we own.”
Today’s pandemic won’t lead to nuclear war (except perhaps in the Oliver Stone movie version).

IT’S OFTEN DIFFICULT to fathom what causes the stock market to rise or fall. The market doesn’t always reflect how the economy is currently performing—and sometimes the disconnect can seem huge.
This sentiment was captured in a recent MarketWatch headline: “‘The world is more screwed up’ than the stock market is currently reflecting, warns billionaire investor.” The article was reporting on comments made by Oaktree Capital founder Howard Marks, who told CNBC, “We’re only down 15% from the all-time high of Feb.

THE GREAT RECESSION and accompanying stock market plunge didn’t seem so bad to me. At the time, I was a 20-year-old college student with a little money in a Roth IRA that I’d opened and funded since my high school days. Sure, it was no fun losing half my investment account, but it wasn’t a lot of money—at least compared to today.
In the years since, I’ve fallen squarely into the super-saver category, socking away a large portion of my income.

I HAVE A BIG PROBLEM with a small word. But before I get to that, I’ll start with a little bit of history.
In his book The Success Equation, Michael Mauboussin tells this story: Back in the 1970s, a Spanish man won the country’s biggest national lottery, called El Gordo—the Big One. Awarded annually at Christmastime, it’s the rough equivalent of our Powerball. In this particular year, when the winner was interviewed,

WHEN STOCKS SLUMP, experts are often quick to advise investors to sit tight or, better still, buy more. But that won’t be the right advice for everybody.
Christine Benz, Morningstar’s director of personal finance and one of my favorite financial writers, recently penned an article listing five questions to ask yourself if you’re pondering whether to reduce your stock exposure during a bear market. I figured I’d work through the five questions—and see what I could learn about my own finances.

AS OF YESTERDAY’S market close, the S&P 500 was down 25% from year-end 2019 and off 29% from Feb. 19’s all-time high. Worse yet, interest rates are near zero, with the 10-year Treasury note yielding a paltry 1.15%. In a few short weeks, the markets have turned from euphoric to disastrous—and there seems to be no end in sight.
At age 43, I consider myself fairly young. But as I watch the markets, what’s been most surprising to me is how many times I’ve seen this situation before.