What are your preparation in case there is a stock market crash?
I have taken the following steps.
1. About 30% of my assets are held in cash. I can use the cash to buy stock if the prices come down to a lower level after the crash
2. Most of my stocks are invested for long term value - i.e. low price earning ratio with high dividend yield. I have also invested in the stock with past savings and do not use any leverage. The crash will not affect me.
A small proportion (about 25%) of my stock are more speculative. I monitor them closely. I should be able to sell them in the event of a crash, at a loss. The impact will be small.
I believe that many stocks are at an insanely high level and are subject to the risk of a severe crash. We do not know when the crash will occur, but it can come at any time.
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