This week, we continue to follow the stock market boom – what we’ve called the “Melt Up.”
Dozens of you wrote in this week answering our question: If you aren’t invested right now, what are you waiting for?
And many of you confirmed that the “euphoria” that typically marks a top in the market isn’t out there right now. Most folks who wrote us were still afraid.
For example, Jeff H. wrote us:
I know that a bust follows every boom. I’m not even that old, but I saw the bust that followed the Housing and Tech Bubbles, and I saw how the financial experts were SHOCKED by it. When markets are fearful, I get greedy. When markets are greedy, I get fearful.
And Mark B. wrote:
I figure that right now, things are too unpredictable… Having lost in a crash before, I’m cautious.
Jeff and Mark, you’re both right, of course. A bust does follow every boom. And once you’ve been burned by a market crash, it’s tough to accept that another one isn’t right around the corner.
But your caution is a clear sign that most folks aren’t at the “greed” stage yet. For example, take this note from William P…
The last 20 years I was working I’ve had four factories close down and move overseas, Mexico and Canada. I barely got seven years at the most at each. I retired three years ago using 401(k) to buy and completely redo myself, small house to cut expenses. I’m getting ahead gradually and I’m only a few months away to start buying a few stocks I’ve been researching.
That’s not euphoria…
Rather, William sounds like a reasonable man only just getting over the “fear” stage and into the idea that making money in the market is possible.
That was echoed in this note from Andrew H.:
I sold out on a downturn in 2013. Did not get back in at all. Stash is earning not much of anything. I know timing the market is not really possible but September/October is a traditional weak time of year. Will jump back in maybe mid-November.
The market is up more than 70% since September 2013 including dividends… or 11% per year. For the market to get back down to its 2013 levels, it would need to plunge almost 40%.
We’re not trying to convince you that the market can go up forever. It won’t.
In fact, the next time the market falls, it’s likely to be far worse than the 2008 financial crisis. There are plenty of problems in the world – namely, massive debt loads.
But that problem is still down the road. And it looks like a long road for kicking a debt-shaped can.
The last 18-24 months of a bull market can often go much higher and at a much faster rate than anyone expects. It’s not unreasonable to think that you could double your entire retirement portfolio before the bull market ends.
We’ll have more in these pages over the next few weeks about how to best take advantage of what could be your final bull market.
Now on to the latest news…
Speculation is rampant in certain sectors:
Entrepreneurs and investors are rushing headlong into the nascent legal marijuana industry, fueling a stock craze reminiscent of the late 1990s dot-com bubble and the recent bitcoin mania.
And while the broad market looks hot…
Nomura’s Masanari Takada notes a spike in the Google-trend score for the phrase “stock market melt-up,” something that occurred in November 2017, and January of this year.
… Not every stock is participating in the rally equally.
The trade fight has weighed particularly hard on shares of industrials and materials companies, which account for more than one-fifth of the 80 stocks in the S&P 500 that have tumbled at least 20% from their 52-week highs.
Two poker stories that I enjoyed reading over the weekend…
There is far more money to be made far more easily playing the stock market, according to several experts and investors-turned-poker players interviewed for this story.
How two first-time screenwriters, a guy from Montana, and a pair of up-and-coming movie stars made the greatest poker movie ever…
Finally, don’t miss editor in chief P.J. O’Rourke’s appearance on Real Time with Bill Maher…
Let us know what you’re reading and watching at [email protected].
With P.J. O’Rourke and the American Consequences Editorial Staff
September 26, 2018