US Stocks Down 15% in 2 Weeks

[Torie]

Strongly considering converting my portfolio to cash at the end of the day.

Learn to always have at least 20% of your portfolio in bonds, and 20% in equities, and play with the percentages in between, but don't make big risk exposure  moves without good fundamental reasons, Dukie. That is one old man's advice. I don't think there are good fundamental reasons for the market to seriously tank downward from here myself by the way.

[Torie]

Learn to always have at least 20% of your portfolio in bonds, and 20% in equities,

Where's the other 60%? 

Your equity to bond ratios bounce around over time. Mine has ranged from about 20% equities up to about 45%. In the bubble run up in 2000 I got it down to about 20%, and it got up to about 40% before the dump of the last two weeks.  I only make a change when I see some substantial change in the risk reward ratio, as the expected equity premium bounces around. At the top of the bubble in 2000, the equity premium got negative. The real expected return on equities was about 3.5% (1% dividends plus 2.5% real economic growth), while the return on long term TIPS (treasury inflation adjusted bonds), was in excess of 4%. It is around 3%-4% now.

Make sense?

[Torie]

The Depression was more about mismanagement of the money supply in my opinion. Milton Friedman made his reputation on that topic. Letting banks fail contracted the money supply - drastically. It started by letting an upstart NYC Jewish bank fail; the WASP bankers did not like the unwelcome competition. Revisionist historical economists think much of the FDR government program antics prolonged the depression. I do not have an educated opinion on that one.