With a bear market upon us and volatility continuing this New Year, fears are arising that a recession may be at hand. During such times, I believe it important to gain a perspective from past bear markets and recessions as we develop an investment plan going forward. Reacting to 500 point Dow rallies or tumbles certainly isn't prudent, thus I recommend turning off your televisions and reading books which may give us an historical viewpoint and strategies for surviving such tumultuous periods. Though I unabashedly recommend my recently published book, I also include a list of some books I would highly recommend and which have had the most influence on me.
When an individual’s portfolio has reached a certain numerical value (i.e. $1 million, $2.5 million, $5 million, etc.), he tends to lock-in that valuation in his mind and is unwilling for it to move lower – at times even desiring to move to cash in order to preserve the valuation. If the market or his stock declines below the level in which he has locked-in the valuation, this can lead to irrational behavior driving the investor to sell his stocks at a lower valuation while also losing the dividend income from his investment.