As the market continues to erase every pullback in short order, investors are focusing less on downside risk and more on  upside potential. Controlling losses is no longer a priority.  As the markets heat up, investors want a piece of the action. As contrarians, that isn’t our approach, and it shouldn’t be yours, either. Ideally, concern for downside should rise along with the market, just as ensuring you’re positioned for the rebound should be your objective during a long bear market. 

Welcome back, dear readers. As temperatures (and the stock market) continue to rise, it’s time for Part II of our two-part summer beach read about potential causes of the next market drop.

It's not clear where the next significant slide will come from. We don’t have a broad tech and growth stock bubble like we had in 2000. We don’t have a real estate bubble propping up the economy. Not that you need a reason for the stock market to slide. There's still no consensus as to what caused the crash of 1987, and experts differ on the reasons for the 1929 crash as well as the depth of the economic problems following the slide.

While it's true that stocks are the best-performing investment in the long run, they're also one of the most volatile, which can trigger poor returns far worse than the other lesser  asset classes, despite the fact that they often have stability going for them.