So with the Dow Jones Industrial Average approaching 17,000 here in the USA, the questions for all of us (millionaires or not) about a pull-back – or worse – in the stock market remain. Our Vampire Squid Investment Bank* wrote to its clients that it expects a ‘10% pull-back’. Some analysts are pointing out though, that such a prediction really says nothing, since a 10% pull-back is quite possible – and even expected in a long bull-market. And are stock valuations ‘lofty by any measure’? Well, the S&P 500’s price-earnings ratio is admittedly high historically. But then we have the super long-term view from Richard Ross, Global Technical Strategist at Auerbach Grayson, shown on CNBC that says we may very well be breaking out of a 13-year sideways band and still go up, up, up. (Whoah). Fortune 500 companies sit on tons of cash, the Fed is not about to raise interest rates drastically, the economy is supposed to grow 3% this year, and demographics favor the USA (compared to other stock markets). But then we have a student loan bubble here in the USA, and as always the peace in the Middle East is tenuous, or is it unraveling and turning into a full-blown crisis? Better not to put all one’s retirement eggs in the stock market basket. As always. That has not changed.
*Referring to the famous quote about Goldman Sachs from the New York Times : ‘The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money’