Investors must beware of potential danger and plan for the future

No given strategy will guarantee the best returns but reasonable strategies will limit losses

It is an axiom that stocks are never fairly priced. The theory of reflexivity states that when a big downtrend or uptrend starts, it is guaranteed to overshoot the fair-price mark. Most of the time, therefore, valuations are higher than justified by fundamentals or lower than justified. 

It is relatively easy for a long-term investor to handle a situation when stocks are undervalued: Keep investing in these stocks and rely on prices improving at some stage. The longer a bear market lasts, the more the eventual returns are. It is very hard to handle a situation where stocks are overvalued. The