Last March (2020) you had silence from the investing world with media, analysts & all that shouting no way a V shape recovery no way.
Pretty much silence from the sectors regarding investing.
Now mid-way into 2021 you have this scenario with Etoro, Stake, legacy platforms, adverts, fund managers, individual portfolio investors, youtube analysts, multiple email letters, Apple stocks noise, webinars, sales funnels, paid newsletters from any random with an iPhone, the ‘it’s only entertainment not financial advice’ video & podcast crowd, all spouting out buffet quotes 1000’s of times over…
This has been the most un-Buffet event, total detachment of stock valuations from a fundamentals perspective.
Two major points for the most recent investors to consider & understand:
1. Stimulus money will stop.
2. Can interest rates stay this low for a 5+ years?
Those two points can have a significant blow to current hysteria.
Everyone has done incredibly well since March ‘20, some gaining a decade of net-worth in the space of a single year. 75% S&P 500 returns is unheard of in that short period.
Having seen this unfold in such detail I wanna make two personal points, both of which are just my two cents:
- I want to see what environment the west & east enter before making large purchases of any asset for a while.
- I am 80% cash.
I see an environment where the risk does not out-way the reward or sustainability. Purely because of stimulus & interest rates going forward.
Back to the Buffet environment, March / April 2020 was a great time to begin long term portfolios or add to them. There is no hindsight, the S&P fell 38%, that’s a freaking buy in anyone’s eyes.
2021 seems so freakin gnarly yet all the investment hype is suggesting to invest now? It’s like, now? You’re saying that now is the time? Where were these views in March 2020?
I feel the newcomers pulled-in by the adverts & online media should strongly consider both stimulus & interest rate environment first.
None of the hype is making it clear that it was March 2020 & October 2020 where the risk/reward strongly favoured risk assets.
WAY UP YOUR RISK REWARD.
I am hearing a small bunch of highly experienced investors speaking on a small scale regarding their appetite for risk because there is about a 50% unclear view on what is approaching around the corner. This is not market timing, this is securing your risk profile.
Cash may be trash, but holding a few equities sectors which correct 50% is worse.
Current unchartered water is in full flow. Though what we do know is many areas of the market are not at sustainable, stomach relaxing valuations.
Liquidity is off the rails high. This is a risky inflationary environment supported by immense stimulus, posing as a safe environment where assets only go up.
The globe was shut down for 15 months. This seems like a conveyor belt heading towards the edge of the Alps.
You must posses a strong stomach to be 100% invested in equities atm.
Not negative, simply looking at perspectives.