Every answer you wanted about 2020.
Absolutely won’t be found here. But… let’s talk about it.
2020 will go down in history as one of, if not the absolute wildest roller coaster rides in mankind’s history. From the boom/bust/boom stock market, global pandemic that is Covid-19, to the social movements that spawned after months of isolation – there is no explaining any of this and we are nary more than halfway through the year. What I do feel compelled to discuss is the stock market, because personal finance is kind a theme around here – and frankly, it puzzles any rational human being that follows.
Stocks are touching on records in the midst of extremely high unemployment and rapidly shrinking GDP. The stimulus provided has been unprecedented but so has the ramifications of hitting the pause button both nationally and globally. The question I get asked almost daily is “should I invest now”, which isn’t really any different than what anybody has asked in the past to be honest…. But these circumstances certainly make me want to give a different/albeit more thorough answer. Which inevitably becomes me talking to myself as much as answering the question to friends or family out loud.
Are stocks valued fairly today? That all depends on what you think the future holds (no different answer than before) and where else you have to/plan to invest. This is a unique time in history, with treasury yields so low and RE prices propped up so high by mind bogglingly cheap lending… It’s almost impossible to find alternatives for the average investor. Couple that with rampant speculation and indexing at levels never before seen and we have a runaway market that seems to have no end in sight.
Does that make me personally comfortable going all in? Of course not, I have always been of the mindset that if something doesn’t make any sense – wait until it does before making a move either way.
If you are in, it probably makes perfect sense to stay in. If you plan to invest long term then it always makes sense to stay on the rollercoaster.
Short term speculation though, that is increasingly looking like a fools game if you invest based on any historical fundamentals.
Please take this in no way as investing advice, I’m not qualified or licensed to give that – theses are simply one mans opinions and nothing more.
Things that give me pause are the civil unrest seen around the country:
– November election cycle
– increasing tensions with China
– Ballooning national debt
– Household debt increasing without pause
– Shrinking GDP
– Fed rates at near zero (out of ammo unless you believe they will go negative)
Those are just a few of the first things that come to mind when I think about pausing.
Of course, as with any other time in history – this will also reveal amazing opportunities for hidden gems and advancement that never would have been available had certain events not transpired.
That is the interesting part about the world and America specifically.
The legendary investor Warren Buffet says it best with “Never bet against America”.
We tend to always find a way forward.
Let’s do the math
Calculate your mortgage or work with the compound interest to see what it can do to expedite your wealth building.