Is Peter Shiff right and the recent drop in the markets is just the beginning? Or, on the other hand, is it just a healthy correction? We don’t know. But there are some facts that can help us:
1. Charts. The curve is very far from the mean. It usually reverses.
2. P/E. It is way above the historical average. We can expect to lower a bit.
3. Cash. The politicians won’t be able to resist the pressure and there will be more QE.
4. Timing. Individuals are awful timing the market. Even if we sell our positions now, probably we won’t find the right spot to reenter.
So, being sensible, a possible solution could be to have a balance portfolio (during the last month we’ve talked to many investors and some had more than 60% of their wealth in stocks, which is huge and very risky). Reduce the percentage of shares until you feel comfortable. Also, it could be a good idea to include some gold as insurance. Amanzingly gold is not overvalued.
1. Charts. The curve is very far from the mean. It usually reverses.
2. P/E. It is way above the historical average. We can expect to lower a bit.
3. Cash. The politicians won’t be able to resist the pressure and there will be more QE.
4. Timing. Individuals are awful timing the market. Even if we sell our positions now, probably we won’t find the right spot to reenter.
So, being sensible, a possible solution could be to have a balance portfolio (during the last month we’ve talked to many investors and some had more than 60% of their wealth in stocks, which is huge and very risky). Reduce the percentage of shares until you feel comfortable. Also, it could be a good idea to include some gold as insurance. Amanzingly gold is not overvalued.
