O-Trap;1837489 wrote:Not that you owe it, but I'd love to see proof.
Ehh, it's up like 10% since the election. If you had $1M, I'd call $100k *hand over fist". If you had $5k in the market, I'd call $500 walking around money.
These markets make me very, very nervous. Much of the Obama run-up (post recovery from the recession sell-off) was fueled by extraordinary low rates and, almost literally, helicopter money. That run-up is on a shakier footing than the financial services housing bubble under W. But the post-election run is driven by even less, economic perfection from a guy who doesn't have much of a plan (much less a good one).
The PE ratio of the S&P500 is over 26X. That's a pretty strong indicator a recession is looming. Granted, a good chunk, maybe 15%, of current valuations is because of the absurdly low interest rates. But a return to more "normal" fed funds rates in the 5-6% range is probably at least a 20% headwind, and the conundrum for me is how can markets be so optimistic while ignoring the interest rates that would come along with such strong growth? And if it's because of inflation, well that means even higher interest (discount) rates.
There had been a lot of cash on the sidelines since Brexit. And when the market voted Trump's election was pro-growth, it came piling in and chasing returns. This is pure momentum right now, and it HAS to snap-back at some point, probably a full correction (-10%) at minimum. Fixed income has been beaten down a bit, and despite the rate environment it may not be a bad play to increase bond funds in a defensive move at this point (but wait until the next fed rate increase).
And then there is perhaps the best indicator of all that it's time to pull out - CC is pumping money into the market and riding.
