I recall many articles advising investors to reconsider their appetite for risk in the aftermath of the 2008-2009 stock market crash. However, today is a much better time to do this.
After the crash, “experts” said that while it’s foolish to sell stocks when they’re cheap, reducing your percentage stock allocation to a more comfortable level is smart. This is nonsense, of course. Selling low is dumb whether you have a smart-sounding reason or not.
It’s impossible to say exactly when stocks are too expensive or not, but it seems safe to say that they’re not very cheap right now. This makes now a good time to think about whether you’re taking on too much risk. Try to remember how you felt back in 2008-2009. How would you feel if that happened again?
Personally, I have no intention of reducing my allocation to stocks, but now is a much better time to do this than it was 7 years ago. Sadly, though, individual investors are more likely to decide to increase their allocation to stocks today than they were 7 years ago.