The article explores how lessons from history, especially regarding unpredictability, apply to public policy and market volatility. It reflects on past events, notably the pandemic, to highlight that while human nature often overlooks risks in favorable conditions, it's crucial to acknowledge potential pitfalls. The author suggests maintaining a cautious approach by avoiding risky assets for short-term needs and emphasizes the importance of rebalancing investments to align with risk tolerance, especially when market sentiments shift from optimism to caution.
Consider that after the presidential election, corporate executives and Wall Street strategists were almost to a person, euphoric. One sent me this text: fewer regulations + extension of tax cuts = ONLY UPSIDE.
Perhaps the best that any of us can do is to mind the guardrails that can keep us out of trouble.
It makes sense to keep any money that you know you have to spend within 1-2 years, out of risky assets.
The funny thing about risk is that it's easy to gloss over when things are going well.
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