6/22/2015 – A positive day with the Dow Jones up 107 points (+0.59%) and the Nasdaq up 37 points (0.72%).
Let me ask you a question. If someone from the future approached you on October 10th, 2007 and outlined the next 7-8 years within the stock market, what would you do? Would you….
- Completely ignore the 2007-2009 sell-off because the market would eventually make up all of the losses and then push higher within the next 7 years -OR-
- Pawn your left kidney, sell your firstborn and then buy every put option you could afford in anticipation of a 2007-2009 decline. Only to repeat the process at 2009 bottom with call options.
Well, I don’t think there a doubt that most people would go ahead with option B. Unless they have few screws missing and/or too lazy to get their broker on the phone.
Why am I bringing this up?
I am beginning to see quite a few “What’s The Big Deal” Or “What’s the Worst Case Scenario” articles being propagated by the mainstream financial media. For instance, The worst case if you invest in a hot stock market
Worst case scenario: In nearly 90 years of market history, if you bought stocks on the absolute worst day, the average time to make your money back was 3 years. That’s less time than it takes most people to get through high school or college. It’s doable. It shouldn’t make you shy away from investing in stocks.
“Obviously, to live through that is painful,” says Valeri, an investment strategist. “But when you think about what you’re investing for — and for most people it’s at least 10 or 20 years out — you will get past that.”
They all come to the same conclusion. Even though the stock market is overvalued, do not worry and keep buying, your investment will eventually appreciate. Perhaps.
Just 90 years? I have the Dow chart going all the way back to the first day of trading. May 19th, 1790 or 225 year. Let me tell you something. There have been quite a few periods of 50 years or more when stocks haven’t gone anywhere.
For example, the stock market hasn’t really gone anywhere between 1790 and 1860. A 70 year period of time. Sure, there were bull and bear markets, but no net capital gains. Then, if you went long in 1899, you didn’t see any “net inflation adjusted” gains until 1951.
So, what is the risk going long today, at the 3rd highest level of valuations in the history of the market (behind 1929 and 2000 tops)? Umm, I don’t know, but I would imagine there is quite a bit of risk associated with such a stupid proposition.
This conclusion is further supported by my mathematical and timing work. It clearly shows a severe bear market between 2015-2017. In fact, when it starts it will very quickly retrace most of the gains accrued over the last few years. If you would be interested in learning when the bear market of 2015-2017 will start (to the day) and its internal composition, please CLICK HERE.
(***Please Note: A bear market might have started already, I am simply not disclosing this information. Due to my obligations to my Subscribers I am unable to provide you with more exact forecasts. In fact, I am being “Wishy Washy” at best with my FREE daily updates here. If you would be interested in exact forecasts, dates, times and precise daily coverage, please Click Here). Daily Stock Market Update. June 22nd, 2015 InvestWithAlex.com
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