PGIM CEO Hunt Says Equity Markets Are 'Substantially Overvalued'

[bucolic_frolic]

Not posted as investment advice, you can make what you like of market valuations, some think it's a bounce, some think the Fed will pump to the moon, some agree with this guru's take. It's what he says about the rest of the world - state and local governments, taxes.

There's even a school of thought that many companies won't have the capital to reopen. I mean it's a business risk! Restart payroll, utilities, and will there be customers? Borrow to enter into a world of slow? 20 million Americans without paychecks. Permanently lower demand. Malls closing, commercial real estate empty, rents flagging.

Reality has to hit at some point. What if Trump held a reopening and nobody came?

[KPN]

1. Good piece. Bookmarking for revisiting in a few days.

Being hyper conservative with our retirement funds since the big March drop. Ate some losses but feels safe on the sidelines for now. I also worry about our three adult kids economic circumstances. All three are out of work right now but surviving adequately with unemployment and food stamps.

[3Hotdogs]

2. Yeah, what would I advise my kids to go into?

Cop, teacher, health care, electrician, plumber or mechanic?

Everything else can be Amazoned or Indiaed.

[Steelrolled]

3. Crying wolf

We have been hearing this story so long, I don't know if anyone reacts anymore. In my view, his chances of being right are somewhere between 0 and 100%. In my very humble view, if you are a long-term investor, it is risky staying outside the market. I have personally heard many sad (and often life-changing) stories of people who tried to outsmart it.

[bronxiteforever]

4. Kick and recommend for visibility

[PoindexterOglethorpe]

5. It is always important to understand that

timing the market is a fool's game.

I'm forgetting the specifics, but gains and losses tend to occur in very short terms. Something like four or five days of losses or gains, and if you have pulled out hoping to get back in at the right time, you are probably fucked.

[Steelrolled]

6. Exactly

If the market is falling, it is easy to get out, but very difficult to know when to get back in. It kills people to come back in at a higher prices than they sold, and it just gets worse and worse for them as the market recovers. I know a number of people who this happened to in the 2009 crash.

[PoindexterOglethorpe]

7. I've read stuff that points out that the biggest market moves tend to occur

something like four days in the year. It's a shockingly low number.

Which is why staying more or less fully invested (less does allow you to have cash to jump in when there is a drop) and just ride things out.

The other thing is that you need to take a truly long term approach. I've been investing since the late 1970s, and over those years I've done quite well. I have not made a killing, mainly because I'm not buying individual stocks any more, which I did back in the first ten years. I have a reasonably balanced portfolio, have an excellent money manager whom I trust.

One thing he did for me was to get me into a couple of annuities a decade or so back. Now I know that people love to trash annuities, but there are some very good ones out there. I have two of them. I started taking the payout from them about a year ago. I'm now 71 years old which is pertinent information. The amount each pays is fixed, and whatever value is lef over when I die will go to my heirs. If I live a really long time, I will have used up all that value, but that's just fine with me. And my heirs are not -- they'd better not be -- sitting around waiting for me to die so they can collect a bunch of money.

Selling off just because you think the market might go down is a poor strategy. For all that people piss and moan about the market under Trump, it is still somewhat above what it was when he took office.

On the other hand, taking profits can be a good thing. If you have a stock or mutual fund that has risen a whole lot, yes, go ahead and sell at least some of it and take that money and do whatever you want. A vacation in Tahiti. Fund a kid's college. Buy a new home. Put it into some other stock or mutual fund. Whatever rocks your boat. But that's very different from trying to time the market.