What do you think were the biggest mistakes of market participants during the financial crisis? It would be informative going forward for the next crash.
Personally I think the 3 big mistakes a lot of people made in 2009 were:
1) Not keeping enough cash as a % of their portfolio to average down their equity positions during the best time.
2) Taking out mortgages to buy (more like speculate) on expensive houses at the worst possible time beforehand (my family purposely rented in the late 2000s because they believed in the overvaluation of the housing market.)
3) Not realizing that their job has a beta with respect to the market, and incorporating that analysis into their portfolio. To me, a job is just another cash flow security (a risk asset) that should be weighed in doing a portfolio analysis just like any stock or bond. I think a lot of people failed to do this forcing them to liquidate equity at the worst possible price when they discovered they didn't have enough 1) cash.
Submitted December 12, 2017 at 11:40AM by mikhael4440 http://ift.tt/2l2RxjZ
