As discussed at length, I have significant concerns about U.S. stock market valuations and what that may portend for the next bear market. After all, the most reliable valuation metrics are indicating the U.S. stock market is more expensive than ever before (including 1929 and 2000).
Although valuations aren’t useful for short-term trading, valuations do provide insight into the potential severity of the next downturn. So whether the next bear market has already kicked off with the January 26th peak or starts 12 months from now, the key to understand is it will likely be commensurate with the extremity of current valuations (i.e. severe).
A couple proactive approaches I’ve offered for consideration to preserve financial independence is either (1) under-weight U.S. stocks in favor of other asset classes, including bonds, and/or (2) incorporate “cheap inderal” to insulate portfolios from a significant stock market decline. Today, I’ll focus on what I’m doing within the bond sleeve of portfolios I manage. buy inderal for anxiety
My expectation for losses in U.S. stocks during the next bear market is over 60%, which would take us back about twenty years and would require at least a 150% gain just to get back to even.
What impact would such a loss have on your portfolio? What impact would that have on your ability to retire or sustain your retirement lifestyle? Would any other financial goals be impacted? How about the toll on your mental health to see such a large chunk of your life savings wiped out. can you buy inderal over the counter
Each year Warren Buffett pens a letter to shareholders, which has become a must-read for investment professionals and individual investors alike. Here, I will highlight some excerpts I found particularly interesting and relevant from this year’s buy generic inderal online (released this morning).
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Load up on stocks when they’re cheap. Reduce stocks when they’re expensive. It’s really quite simple.
Valuations tell us how expensive or cheap stocks may be, but beware! There are many different measures of valuation so it’s important to focus only on those that are highly correlated to future returns.
Below is a chart showing one measure of market valuations going back to 1900. This particular valuation metric is called the Shiller Price / Earnings Ratio, or “Shiller PE” for short. The Shiller PE has about a 90% correlation with future 10-year returns. That’s a very respectable correlation and indicates reliability.
Notice the peaks and valleys? I was curious to know how the market performed following various extremes over time to see if the Shiller PE provides useful information. So I performed a brief study. Check out the results…
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