Welsh phase of the day: sut dych chi (how are you).
The Warren Buffett indicator has me worried.
You'll probably heard that we are due for a financial market correction. The US Government providing second stimulus checks of either $600 or $2,000 depending on what happens may just move that along. You see to provide these checks you need money, and the US Government is in debt (big time) so you have to print money, trillions of dollars of the stuff which, if you think about it, just weakens the value of the existing dollars with the end result of inflation.
To be honest, anybody who has been paying attention this year with 50-100% returns on stocks being easily obtained. Sure it has been a special year with the work environment radically changing and a bunch of people out of work but returns like this are not normal.
I like to think of myself of a decent stock investor - I've been doing it for more than a couple of decades, read a LOT on the subject and put my money where my mouth is. If I get a 20% return on a year I am happy. 30% and I'm ecstatic. This year I'm worried.
Yes I invested through the Dot-com boom and bust. I was there for Pets.com and all the other companies that went to the wall. I invest long-term and a correction will recover. They always do - even the 1929 crash corrected itself, eventually.
I never try to time the market, but this time I may just take some money out of the market while I can. Putting it in cash is a mistake as you are just losing to inflation, but this time I don't have a spare 10 years on my hands to wait out the correction.
Stocks should be worth half of what they are. A 50% correction takes a 100% return to get back to where you were, but a 50% correction is indeed expected.
If you haven't read it already, then you heard it here first.