Stocks went nuts again last week.
It was another arm wrestle between bulls and bears.
Stocks flying one day. Stocks tanking the next.
If you have investments in the share market which you’re going to be using for retirement, this should unsettle you.
In early October, right before the last equities bear market pretty much halved stock values, the VIX volatility index was spiking above 60.
Usually February has been one of the kindest months for stocks during this nine-year bull market.
This one, not so much…
But, as Barrons put it in an article over this weekend (my emphasis added)…
‘The decline in early February isn’t a good reason to sell. What is a good reason to sell is that stock prices are too high from a longer-term perspective.
‘The fact is that prices are still elevated, relative to fundamentals. As the Nobel laureate Robert Shiller pointed out two weeks before the correction, the U.S. cyclically adjusted price/earnings ratio has been higher than it is now only twice in the past century: at the peaks that preceded the stock market crashes of 1929 and 2000-2002.’
It’s a pretty simple choice.
If you think the rate of return on stocks is going to be dramatically less over the next 10 years than it was over the last 10 years, you should adjust your portfolio now.
Before the downturn properly takes hold.
You should also look into measures you can take to potentially financially benefit from the crash while it’s happening.
‘All the market indicators right now look very similar to what we saw before the Lehman crisis, but the lesson has somehow been forgotten…’
— Central bank guru William White
‘Based on the premise of ‘‘for every action there is an equal and opposite reaction’’ — then the next crisis is going to bigger than most people can possibly imagine…’
— Vern Gowdie