If you have been reading my articles then you know I have a very straight forward style – I tell you what I’m thinking and I don’t like to use “Wall Street Speak”. In this article I am going to give you my “take” on the current markets and what, in general, we think investors should consider now. You rarely hear specifics from the Wall Street machines, as they ALWAYS want you thinking it’s a great time to invest (in whatever they are selling, coincidentally). Not here.
I think we are likely in for a world of hurt in several market areas. Specifically, I believe that the stock market has risen far beyond where it belongs and is in a very precarious position. It won’t take much of an upset to “spook” investors and cause the bottom to drop out, so to speak. What kind of upset? Oh, I don’t know, maybe: Trump; Clinton; North Korea; Iran; Syria; The Fed; Earnings; Banks; Europe; Terrorism; whatever. The point is, I really don’t know what the cause will be and I don’t really need to know.
It’s been a long time (about 7 years) since the 2008-2009 market collapse brought on by the financial implosion. Before that it was a long time back (again, about 7 years) to the previous collapse (2000-2001 Technology Collapse). Both of those market blow-ups saw stock market indexes lose in the neighborhood of 50% of their value! (Source: Montley fool website). 50%; Half; $1,000,000 stock portfolio loses $500,000 in value type of thing…. See why I’m concerned now?
Now, I’m not predicting a 50% drop in the market – actually, I’m not predicting anything. Nor am I saying it can’t happen again; it certainly can and well may. What I am saying is I think you need to be ready for a significant market drop over the next 1-2 years.
Most “advisors” would never put this type of thing in print, if they even have a market outlook. They just follow their Wall Street firm’s generic marketing outlook, collect client assets and then always tell you “stay the course”. If you don’t believe me on this, any readers who ARE NOT MY CLIENTS, call your advisor today and ask them to send you (in writing) their expectations for the markets going forward. Not their firm’s outlook… their own take on it. Do they think you should reduce your exposure or not? See if they even will do it. Let me know if they do and I’ll eat some crow, but I’m not counting on it.
Have a great Fall! Just be careful with your investments.
The views expressed are those of THOMAS HAMILTON and not necessarily the opinion of LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Investing involves risks including possible loss of principal. Past performance is no guarantee of future results.
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