Stock Market Question

[BlueDog22]

So do you think the stock market is a bubble, and if so do when you you think it is going to burst?

[elleng]

1. It's been in a bubble for some time,

'inflated' if you will, and in the process of bursting, or coming down to reality, now (imo)

A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. hhttps://en.wikipedia.org/wiki/Stock_market_bubble

[dewsgirl]

2. Stock market status:currently bursting.

[lastlib]

3. Personally, I think it's time....

...to start taking some profits and move to cash or short-term bonds. Stocks move up in anticipation of increased profits and thus cash flow. When they start moving down, there is an expectation (right or wrong) of decreasing profits and cash flows. So I'll be heading for the exits....

This is a personal opinion, and does not constitute investment advice. YMMV. (Obligatory disclaimer)

[NRaleighLiberal]

4. Go to yahoo finance and look at the entire Dow chart

full history...it is all perspective on where we are when we think we will need it.

Many rises and falls but a general trend.

[SWBTATTReg]

5. You can flip a coin depending on who you talk to...

I like earlier post that since markets been going good for quite some time, probably would be a very good thing to take some money off the table. Can't go up forever eh?

You can get back in if opportunities open up again. At least you have the cash and no worries if markets do go down. Otherwise stay in. If you are questioning, then perhaps you've asked and answered your own question already.

My disclaimer...I'm no longer in markets, haven't been recently. Cash is king for me for now, and I do feel better, not worrying about anything.

[BlueDog22]

6. Markets

I've been sitting on cash for awhile too. Things were starting to look too good to be true, so I cashed out all of my major investments.

[PoindexterOglethorpe]

7. Keep in mind that market timing is virtually impossible.

A lot of people thought that Trump's election would mean a huge drop in the market and they sold. The market is up quite a bit since November 2016, and is still up since that date.

A lot also depends on when you first bought. Right now we seem to be in a long overdue correction. And that is a good thing.

Keep in mind that stocks go up and stocks go down. Staying invested in the long term and being diversified are basically no-fail strategies.

I am down about 5% in recent days because of the decline in the market. Which is itself down about 10%. My lesser decline is a tribute to a good financial advisor who has me in investments that are a bit more conservative than the market as a whole, so my downside exposure is a lot less than the market. My upside is also a bit less, but I'm very pleased with how my investments have done in recent years.

[SWBTATTReg]

8. I totally agree w/ your excellent points!

You're lucky to have a good financial advisor that you trust.

Also, I too, thought tRUMP would cause the markets to down, but they didn't. I even tangled w/ the thought of buying some puts, but my philosophy of investing at this time in my life said 'No, don't get emotional and get involved'. Which I very happily adhere to today. My blood pressure doesn't allow me to watch the roller coaster effects of stock market pricing.

So, I would have been losing a bit of money, despite everyone saying tRUMP would lay waste to the markets, and they didn't collapse (puts would have expired).

I didn't get out of the stock markets because of tRUMP's election, but got out mainly because I was retiring and didn't want the worries (got out years before). Got into real estate (good renters (the whole key to this option)), and other misc. investments since I had more time on my hands, did good, love it too.

I don't miss it, and love the freedom of no worries.

Best wishes and take care.

[bucolic_frolic]

9. Bull markets climb in stages

the last stage being euphoria. What's notable is that optimism lifts all stocks. I think it was "A Random Walk Down Wall Street", the classic by a Princeton economics professor, who showed how in the late stages of a bull market the indexes keep rising but the average stock and lesser stocks with poor earnings prospects suddenly stall and deteriorate. We could add to that how 5% of the stocks earn 90% of aggregate corporate earnings. The laggards are measured with the advance/decline ratio. When speculation ends everyone wants out of the laggards and they really tumble. IMO laggards have been evident for months, probably since early October. Not that good news doesn't temporarily juice them, but then they go back to laggard territory. Very evident in biotech, especially developmental stage biotechs. But understand I read John Hussman's commentaries, as well as Moosesignal which is in a major cash position right now.

[progree]

10. I sat out most of the 1990s because I thought the market was overvalued

and yes, the bubble burst, twice (dotcom bust and housing bubble bust). But I missed out on a ton of upside, and I am well behind a buy-and-hold investor. I have since learned my lesson -- time in the market beats trying to time the markets. Fortunately I did keep about 25% allocation in stocks during the 1990's, and that was my only source of significant positive return.

Fortunately I hung tough in a nearly 100% equity position since the early 2000's. I hung tough during both the dot com crash and the housing bubble crash, and I'm glad I did.

Earnings drive the market. Not DU sentiment.

[PoindexterOglethorpe]

11. Bingo.

Had another talk this past week with my financial guy, and he emphasized that earnings drive the market. And the expectation is that earnings will rise about 25% this year. That's a lot.

Sometimes it is prudent to sell some of one's holdings, but sitting out the market in a big way makes no sense whatsoever.

I was hurt pretty badly in the dot com crash, but that was because I let the advisor I had then put me in far too many dot com stocks. He was a good guy who'd bought into the hype. They guy I have now, and I'd had him for around 15 years at this point, is far more grounded. Another thing is that as I'm a lot older (I'm 69 years old) my goals are quite different from what they were several decades ago.

I do worry a bit. An extreme downturn would hurt me, and might make me seek out employment, at least of a part time nature. That wouldn't be the end of the world for me, but I do enjoy not working. Meanwhile, I live frugally and enjoy the life I have.