Stock Market volatility: buying opportunity or warning?
I’m going to start this week’s blog with the last sentence from last month’s Stock Market related blog: “when bad things happen in the stock market, they usually happen in October.”
I sincerely meant that as a warning. Now, truth be told, I’ve been warning people about the risks in the stock market for over the past year. Since I’ve starting ringing that bell, the stock market has kept on rising. A year ago, the Trump tax law was passed, which I believe has been driving the market higher. I stated in a blog in November 2017, that since the new law cut taxes on corporations by 10-15%, then stock prices could potentially double (based on the guideline that future stock prices are generally estimated to be 10 times earnings, so 10% X 10 = 100% higher).
That was then. This is now. This year (2018) has been a very good year for the Stock Market, but as the saying goes “all good things must come to an end.”
I would be very reluctant to put any new money into the market at this time, and I don’t see the recent market turbulence as a “buying opportunity.” My recommendation hasn’t changed over the past year, and I still believe it is a bad time to be in the stock market. If you’re still leaning toward investing your hard-earned cash in the stock market, my final recommendation is that you treat it like a trip to Las Vegas, and only gamble what you are willing to lose.