Wait for the fat pitches

[WendyBG]

https://www.wsj.com/articles/the-stock-markets-future-aint-w…

**The Stock Market’s Future Ain’t What It Used to Be**
**In recent years, investors often got rewarded for taking reckless risks, but in unforgiving markets, it’s harder to recover from mistakes.**
**By Jason Zweig, The Wall Street Journal, April 15, 2022**

**With U.S. stocks off more than 7% and the bond market down almost 9% so far this year, many investors seem to feel they have to take more risk to catch up.**

**In fact, you should take less. In unforgiving markets, it’s harder to recover from mistakes. ...**

**<snip list of high-cost, illiquid "alternative assets.">**

**Save more, spend less (especially on investment-management fees). Avoid chasing illiquid assets — some of which, like private equity, are no longer definitively cheap relative to publicly traded stocks. Above all, don’t take bigger gambles to try catching up. ..**

**“If we get rising yields [as interest rates go up], more valuations will be challenged,” he says. “If you take less risk now, not more, you will be able to swing at the fat pitches when they come.”** [end quote]

The Wall Street Journal is usually bullish, even rah-rah bullish. It’s a change of tone when they start publishing articles about I-Bonds and waiting to invest until “valuations are challenged,” which is jargon for “bear market.”

For more detailed, quantitative analysis of just how badly the market is overvalued, look at John Hussman’s charts. Many people pooh-pooh Hussman as a perma-bear, but you can’t argue with numbers.

The markets were pushed way past historic valuations by fiscal and monetary stimulus that was way past historic amounts. Now that the fiscal stimulus is ending and the Federal Reserve will raise interest rates, the market will probably more more toward historic valuations – much lower than today.

https://www.hussmanfunds.com/comment/mc220325/

“Wait for the fat pitches” means don’t be invested at the peak – hold cash until the market drops.

https://www.multpl.com/shiller-pe

Wendy

[intercst]

https://www.hussmanfunds.com/comment/mc220325/

“Wait for the fat pitches” means don’t be invested at the peak – hold cash until the market drops.

The simple S&P 500 has returned 63% over the last 24 months. I’ve been ignoring Hussman for 30 years and am overjoyed with the results.

Just stay invested, keep the money you’re going to spend in the next 5 to 10 years in something safe like a MMF or short-term bonds, and watch yourself get wealthy.

intercst

[bjurasz]

Just stay invested, keep the money you’re going to spend in the next 5 to 10 years in something safe like a MMF or short-term bonds, and watch yourself get wealthy<\i>

I want a double in 10 years to hit my goals. Normally easy to do. Now?

[intercst]

bjurasz writes,

<<<Just stay invested, keep the money you’re going to spend in the next 5 to 10 years in something safe like a MMF or short-term bonds, and watch yourself get wealthy.>>>

I want a double in 10 years to hit my goals. Normally easy to do. Now?

Doubling your money in ten years is hit or miss. Quadrupling it in 30 years a surer bet.

But I note that you’d be about 2/3’s of the way to your goal had you held the S&P 500 over the past 24 months instead of cash. If I’d sold everytime an “expert” warned of a crash, I’d still have a need to be employed. The 50%+ stock market declines in 2000 and 2008 are lost in the round-off of a 50-60 year retirement investing cycle (i.e., 30 years of saving for retirement, and hopefully 30 years of spending while in retirement)

intercst

[BenSolar]

“Wait for the fat pitches” means don’t be invested at the peak – hold cash until the market drops.

There seem to me to be numerous quality companies/stocks trading at very reasonable valuations. I’m pretty much fully invested, in stocks I see as a good value. So far this year my value picks are up, not down like the S&P, and while a serious bear market is likely to drag down my portfolio to some extent, I expect the robust earnings and good positioning of my companies to protect me from permanent loss of equity.

I am also watching some high growth companies that have had their stocks crushed already, hoping to identify the ‘fat pitch’ moment to buy them when valuation is good, and hoping to switch from one or two slower growth more cyclical companies I’m in now.