Are Stocks in a Bubble?

Recently, Kiplinger’s published an article (both in print and on the internet) which raised the question of whether stocks were in a bubble. It raised some interesting items, many of which have been covered in the FI “sphere” already.

  • Year-long boom since the 2nd qtr 2020 Covid Crash
  • Major market indexes pulling back and tech-heavy Nasdaq down
  • Irrational speculation in specific stocks (Tesla, Gamestop, etc.)
  • Incredibly high P/E ratios
  • Eventual stopping of the Fed’s “pumping money” policies

The article then covers some moves you could make, some of which I agree with, and some I don’t:

  1. Park some of your gains in a low-risk money market account (don’t agree, not paying anything)
  2. Purchase some 10-year Treasury notes (not sure, currently paying 1.03%, so not a great deal)
  3. Focus on stocks with defensive traits (agree, value stocks, high dividend stocks, etc.)
  4. Consider sector investing for specific cyclical stocks (agree, certain sectors do better in market downturns)
  5. Consider emerging markets (somewhat agree, I have a portion of our assets in this)
  6. Stay the course (definitely agree. Have a plan, stick to it, continue to invest)

Overall, interesting read

Read more

Mr. 39 Months

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