three tips for preparing a bankrupt market

Despite the incredible bull race we've seen in 10 years since the end of the "lost decade," stocks don't always go up. Indeed, as this lost decade reminds us, they can go down and stay for years, especially if you start from a place with tense assessments and very high expectations.


While it is never fun to think of a market crash, it is time to plan when the measures regularly hit new milestones. After all, most resources are at your disposal to switch from those who create wealth to those who protect it. Not only that, but you can also make the switch by selling the least number of shares at high prices. This is an effective time to do this. With this in mind, here are three tips to help you prepare for a bankrupt market.

1. Reserve the money you will need in five years
One of the most important rules for asset allocation is that the money you have to spend in your portfolio for the next five years is not part of the stocks. If you missed this rule during the bull market now is a good time to focus and convert it and buy enough liquidity or investment-grade bonds of the same term to reach this threshold.
Note that this does not mean that you need the full five-year value of your total costs or cash rewards. If you have income from another source, e.g. For example, work, pension, or social security, this income covers part of your expenses so you don't need your wallet to cover it. But if you are considering selling stocks to buy a car, helping a child pay school fees, or spending some of their resources over the next five years, now is a good time to take that money out of the stock.

2. Evaluate your stocks based on your long-term potential.
Ultimately, the shares are nothing more than financial assets that represent the stakes in the companies that they offer. Over time, the value of a company share is based on market expectations for the cash flow until the last closure of the company. However, there is no guarantee that the market price will be close to this fair value for the company day in, day out. Here is your chance.

After a huge market, it is possible that at least some of your assets are not worth as much as the market offers them. If you can identify those who are too expensive for your long-term cash generation potential, you can sell them and collect more money than you otherwise would. This is a great way to generate money for your short-term expenses and make sure you have money to buy good deals when the market wears off.
3. Let your dividend inform you about the health of your company.
In addition to the cold money they provide, a company's dividends can tell a lot about what's really going on with the basics of business, regardless of what the stock price is doing. A company's dividend payment index shows how much you earn compared to what you get. A low payout ratio combined with a high dividend yield generally indicates that the underlying is much stronger than the market recognizes.

Since a company pays its dividends based on its ability to generate liquidity, it is also very possible for a company to increase its dividend even if the prices of its shares fall to the ground. It is more effective for their investors: the money they receive without having to sell these securities as they fall. An increase in dividends combined with a decrease in stocks could also be a reason to consider buying more stocks. Ideally, this dividend also offers cash to make this kind of purchase.

Get ready now and get rid of the panic later
There is no question of whether the market will collapse. It's only a matter of time. In the incredible bull market, we've seen over the past decade, you're probably in the best position to prepare for this shock. It is, therefore, a good time to prepare for the accident.

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