Be Ready Before the Next Stock Market Crash: 3D Systems Corporation (DDD)

Second, beware of danger signs in your stocks. All sorts of different types of risks abound right now, whether it’s the threat of higher interest rates in the long run, exposure to government budget cuts, dependence on the reawakening of emerging-market growth, or tame inflation levels for much-needed goods and services. All of these risks have definite impacts on particular stocks, and if you own them, you need to be aware of the risks to decide whether or not the potential reward is worth holding on for. Sell any stocks whose stories you no longer believe in.

Finally, when in doubt, don’t be afraid to do nothing — except keep your eyes open. The temptation to take action is huge, especially with trading vehicles like ETFs making it easy to day-trade stocks, sectors, or entire swaths of the market. Doing too much is just as bad as not doing enough, and if you’re not careful, it’s easy to get into a situation where you’re whipsawing back and forth between wanting to buy stocks for their profit opportunities versus wanting to sell them in order to protect yourself.

Be smart
Preparing for a market crash may seem like a downer, but it actually makes it easier for you to be optimistic about your investments. With a plan in place before the next crisis hits, you’ll be better able to respond the way you want if the worst does happen.

The article Be Ready Before the Next Stock Market Crash originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys and has options positions on 3D Systems. Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.