Preparing for a bear market is not about an all-or-nothing decision. It's about making sure you are investing within your risk tolerance so that you will be able to ride it out without acting emotionally.
History doesn't repeat itself nearly as identically as people repeat history. And few people wake up in the middle of the night screaming, "I have to rebalance my accounts as soon as the sun comes up!"
If you're an investor 55 years of age and over and you plan on retiring within the next 10 years, you are the one this applies to the most. If you're in your first five years of retirement, then this applies equally to you. If your investment portfolio takes a big hit early in your distribution years or a few years before that, it could have a lasting negative effect on your potential to fund your later retirement years. That's because you'll have to sell more shares of stocks or funds to maintain your distribution amounts while having fewer shares working for you during the next rally.
For many investors still in the accumulation phase of wealth building, a down market actually is a friend. But no one can afford to be complacent. The right investment portfolio, the one you can live with, isn't necessarily the same as the one that is currently generating what seems to be endless returns.
I've developed a rapid complacency test — sort of like the rapid flu test. It's only four straightforward questions. Don't be afraid to take it. Not taking it and avoiding the truth will result in a far scarier situation.