“Know when to hold ’em; know when to fold ’em; know when to walk away; know when to run.” – Kenny Rogers, “The Gambler”
If you’re invested in the stock market, is it time to fold and run away? I learned the woes of the stock market many years ago and usually don’t recommend that my clients be invested in the stock market. In fact, I’ve told them to run from it for the last 15 years! I’m not a gambler and I do not believe wise savings decisions revolve around financial vehicles we cannot control.
My conscience will not allow me to advice our clients to keep plugging money into a bloated and overvalued stock market. I’m not into fear mongering, but I’m into realistically stating the facts about the stock market
The problem with the stock market is that the only things we can control are how we engage it or whether or not we engage with it at all. Our financial outcome is not within our hands.
The signs are pointing to now being the time to cash out of the stock market. The evidence is that the stock market has nearly tripled in the last six years… Just this week it has set records. Bull runs do not continue indefinitely.
Next, volatility in the market is increasing. The market has grown since 2012, but since i2014 three to seven percent dips have not been uncommon. Look for much harder dips as the market approaches the epic correction.
Next, private banks and even Bank of America are holding larger amounts of cash and bolstering reserves. Clearly investors with large reserves who stand to lose the most are taking precaution to protect themselves.
Further evidence shows that the housing market has loosened its lending standards again, and this has driven home sales… that combined with low to zero percent interest rates.
Economic Analyst Jesse Colombo states that we are in a larger bubble than we were prior to the Great Recession. His research leads to him to believe that the current bubble will cause a much more severe reaction in the markets.
The media will not even come close to telling you that we may be in a “Bubblecovery” as Colombo says. Bubblecovery is defined as when the economy appears to be coming back from a recession, but may actually be entering an asset bubble masquerading as a recovery, caused by the ease of obtaining inexpensive loans to finance asset purchases.
In fact, most in the mainstream media will tell you that the market has room to grow this year.What am I driving at? I would get out of the stock market as soon as possible. Our clients did not sustain losses in the 2000 stock market crash, and in the 2008 crash, our clients did not lose. Remember when you lose 50% you must earn 100% to break even. Is that a gamble you’re willing to take?