Volatility Update #3

As you know, I’ve been tracking three volatility-related record streaks in real-time with you. The first two streaks (1) number of consecutive days without a daily decline ended on January 29th, and (2) number of consecutive days without back-to-back 0.25% declines ended the following day.

Streak #3 was the number of consecutive days without a 5% correction. In Volatility Update #2 (January 30th), I mentioned that this streak would end before year-end, “and, maybe, even before the first quarter is over.”

Well, today, before the end of the first quarter, this streak finally met its end at a hair over 400 days. Continue reading “Volatility Update #3”

This Has Never Happened Before. The MOST Extreme Stock Market Valuations In History

Executive Summary

  • Over the last month, U.S. stock market valuations, using the most historicallyreliable measures, have become the highest they’ve ever been. Ever.
  • Based on current valuations, the next bear market in stocks may result in losses exceeding 60% from the ultimate top.
  • The next decline will be painful for most investors as every bear market tends to be but particularly problematic for folks nearing retirement and those already retired. All their retirement plans may be in jeopardy if they do not take steps to adequately protect their wealth and preserve their financial independence first and foremost!
  • There is hope for disciplined investors who understand the difference between a marathon and a sprint! For those investors, the next bear market may provide many attractive, sustainable, and sound investment opportunities at much cheaper valuations.

Continue reading “This Has Never Happened Before. The MOST Extreme Stock Market Valuations In History”

Quarterly Market Update – This Has Happened Only Two Other Times Since 1900…

It’s that time again. The time when I review the market’s performance and important metrics for the quarter.

In short, it was a strong quarter for most assets. However, market valuations continue to get stretched to extremes implying the ultimate snapback will need to be that much greater. In fact, valuations have only been this high two other times since 1900. The first time was right before the Great
Depression and the second time was at the Dot-Com Bubble

Therefore, it is reasonable to expect subdued returns over
the next ten years and plan accordingly.

Q2 Market Performance
I’ll just briefly summarize various index returns for the quarter so we can get to more meaningful insights. International stocks continue to be the top performer.


U.S. Stock Market Valuations
Today’s price of a future cash flow determines your return. For instance, if you exchange $50 now to receive $100 in ten years that implies a 100% return. If, however, you exchange $90 today for that same $100 in ten years your return drops to 11%. So price paid today is extremely important in determining future returns.

Continue reading “Quarterly Market Update – This Has Happened Only Two Other Times Since 1900…”