We begin today's episode with a check of market performance from April 15th-May 15th. Ed Lambert walks us through the changes in the S&P 500, small cap market, Russell 2000, and more.
The focus on today's podcast is fire drills. Markets can be volatile and uncertain. There are pullbacks, corrections, and bear markets. Alex Cabot walks us through some of the more recent incidents of each, including the COVID response last year. The proper time to "stress test" your portfolio, or run a fire drill, is when the market is doing well. This will enable you to create and evaluate a plan more objectively, without the stress of a down market.
Ed then gives us an example portfolio, explaining how it will perform in various market conditions. And it's important to remember Warren Buffet's advice: The market, short term, is a voting booth. But in the long run, it's a weighing mechanism.
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