A STOCK MARKET HIGH, NOW WHAT?

By Preston Pysh

At the end of today we had one of the highest stock market closes in the history of the US (today = 18,226 and the highest on record was 18,312.39 in May 2015).  Now what?

Anyone that has listened to the podcast knows that I’m a bear on the US stock market for many reasons.  Instead of highlighting those reasons in text, I’m going to hand you off to one of the best videos I’ve seen highlighting all the risks that currently exist in the economy.  The video was created by our good friend Grant Williams at Real Vision TV.

Now, I agree with Grant completely, but I want to emphasize something very important: Who knows how much longer these crazy circumstances will last! I don’t know…

This is such an important learning point.  Although we know there are unimaginable amounts of risk in the current financial markets, there’s no possible way of us knowing when the exact timing of this will turn for the worse.  So, you might be asking yourself, what should I do?

The answer is simple.  Adjust your portfolio size and it’s exposure to risky and volatile asset classes.  This is where talented portfolio managers make their money – literally.  They focus on avoiding the type of asset class and exposure to securities that could have large and negative price swings.  In short: Protect your downside risk!  Play defense.  Protect the goal.  Get boring.  Avoid Sexy.  Tell your friends how lame your investing approach is.  Do whatever it takes to avoid risky assets.

All I can say is thank you Grant!  Thank you for explaining this in such a simple and educational manner.

Please comment and tell me why this is bad advice.  I really want to hear a strong argument in the opposite direction.

-Preston

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