Are we in a bubble? It sure looks like we may be. Stock prices seem utterly disconnected from reasonably predictable earnings for a year or more. For this reason, we continue to counsel caution. Keep lots of dry powder.
This correction was long overdue, and the Coronavirus is just the excuse, or explanation, that is easy to paste on it. If not for the virus, something else would be blamed. But it was time.
The virus-driven hammer drop China’s experiencing now should lead the entire emerging sector lower, creating an attractive buying opportunity through late winter and early spring.
The investment markets have been on a bit of a roller coaster since the September rally, with the continuing trade war, instability in the Middle East, and political drama with the impeachment inquiry all contributing to some sharp market bounces.
Besides the risk-reducing benefits of diversification, the odds may be very good that big profits may be in the cards for non-US stocks in the years ahead.
Often the most predictable trading strategy can be a “buy it right” approach similar to that used by those who’ve found riches by investing in real estate, buying property on the cheap, and collecting rent until the market got hot.
Investors building retirement portfolios have many choices. They can consider stocks and bonds, savings accounts, certificates of deposit, real estate investment trusts, an index fund, mutual funds, and many others as they look to build a diversified portfolio using asset allocation. Annuities, whole life, and other insurance company products can add to the mix.
Investors building retirement portfolios have many choices and this can get very confusing.
Often consumers start investing using savings accounts, the money market, and other short-term investment options. Later, when they start to save for retirement and get serious about other financial goals, they may keep this short-term mentality, but this can be a mistake.
While it is inevitable that some will move faster, it is important to emphasize that we like them all, and hope for nice profits from each of them, barring unforeseen problems. We think it is important to try to separate the long-term probabilities from the short-term noise like what’s trendy, and how the media is reporting.
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