This is why stock markets will take a hit
Oct 25, 2019
That markets are over-valued is barely a point worthy of debate.
There are always ways to twist & turn or justify the numbers, but the warning indicators are flashing everywhere.
Speculative activity has been rife, from cryptocurrencies to cannabis stocks.
In Australia, growth stocks have been often been priced at levels more readily associated with bubble activity.
Short-sellers in some of the most explosively priced stocks in the US have been punished as the market has held up for longer than they expected…which can often happen.
This is one of several good reasons not to be a short-seller, unless you really know what you’re doing!
Although predicting market movements can be a fool’s errand, in recent cycles this is the point when complacency has set in, which can be dangerous.
Note that in the US the CAPE ratio is still running at close to 30.
For reference the long run average (mean) ratio has been 16.6, and the long run median ratio has been 15.7.
This means that when the tide goes out, the ride down will be a boneshaker.
Stock market downturns come around, and there’s nothing new about that.
And you’ll note that low interest rates have not previously spared stock market corrections when sentiment turns.
What matters most is that you’re prepared for the downdraft when it comes.
I’m now invested to a small extent in some already cheap emerging markets, but most of my liquid funds are in cash (or in mortgage offset accounts).
How are you preparing?
I discussed market cycles a little further in the short video here
Whenever you’re ready… here are 4 ways we can help you manage your own money and go next level wealth:
- Boom or Bust in 2021 – 20 minute online workshop for investors
Register for my next free online training - Boom or Bust? How to change your investment plan for 2021 - book in here
- Subscribe to our Top 100 Podcast for Investors
Listen in to our new podcast - The Low Rates High Returns Show - Apple , Spotify , SoundCloud
- Join our Implementation Program
We’re putting together a new coaching case study group this month for private investors. If you’d like to get the plan, tools and timeless principles for managing your money and creating next level wealth … just send an email to [email protected] with the word “Case Study” and we'll get you more details.
- Work with me privately
If you’d like to work directly with me and Stephen Moriarty directly to help you map out and action your next level wealth plan… just send an email to [email protected] with the word “private”… tell me a little about your situation and what you’d like help with, and we’ll get you all the details!
