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