My short term view of stocks hasn't been popular, but it's getting there, unfortunately.
When we have a bull market run, the more stocks that participate, the better, because it means the rally has a lot of energy. With so much money sloshing around from monetary (Federal Reserve) and fiscal (Congress) stimulus, the rally spread to ever more risky assets, like meme stocks and crypto.
It also works in reverse. When the most speculative assets retreat, it's a sign that the rally is losing energy, aka buying power.
Investors take money from retreating risky assets and go heavier into less risky assets, like the secular growing tech stocks; FAANGM - Facebook, Apple, Amazon, Nvidia, Google (Alphabet), and Microsoft. Since these stocks have such a strong pull on the
S&P 500 Index, the deterioration of the lower tier stocks is masked by the charge into mega-cap stocks. If those giants start to lose energy too, then the deterioration will become visible to everyone. By that point, stocks could already be in correction mode.
Time will tell if this is indeed happening now. It's what happened in early 2000, which preceded the tech wreck of that era.
But I know one thing for sure. Some investors can't take the risk to wait to find out because they're retired, getting closer to retiring, or have some other life-cycle goal close at hand. If you just act on that, you're ahead of the game no matter what the economy and stock market throws your way.
I've been talking about this stuff all week on my livestream. For those of you who have been tuning in and asking questions, sharing words of wisdom and encouragement , thank you! You make life a joy! If you're not watching the livestream, you could catch it in replay if we are connected on social media or if you follow my YouTube channel. Links below.
Highlights form this week's livestreams are below. You won't want to miss them.
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My livestream show is called Be the Boss of Your Money. I broadcast every Monday through Thursday at 4:30 PM EST on LinkedIn, YouTube, and Facebook. You could watch the replays immediately following the livestream on my timelines.
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Thanks and see you next week,
Mitch
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