I’m not a financial expert by any means…but at some point I decide to follow the data and ignore the stories we tell ourselves. Here are some recent data points and nuggets that I found help full when I decided to take a seat in the audience for now.
1. The Macro trend – Just freaking scary. From macrotrends.net.
The inflation corrected picture looks a bit better, but draw your own conclusions.
2. The Micro Trend – The S&P 500 has fallen 9 days in a row. The last time that happened was in December 1980.
In the last 3 month period from August 5 till November 5 the index is down (are the big guys slowly lowering their positions?):
“That alone, no doubt, must terrify most investors and given the tightening of the US Presidential race (and Senate as well), investor anxiety has naturally been surging,” – FundStrat’s Tom Lee.
The professionals will tell us that the above is a long losing streak, but it’s a very small decline, and nobody should worry. Hmm.
3. The Economy – While the U.S. economy may look good on paper (low unemployment rate, interest rates are low, and the growth of the economy), when digging a little deeper, you’ll find discover that the underemployment rate is still at an unacceptable high level, wages are still stagnant, and personal debt levels are still high and half of all Americans are still living paycheck to paycheck.
Trump’s popularity is an even better indicator that many Americans don’t think the Economy is an a good state for them.
4. No Government Help – The Federal Reserve has no more easy money to dole out. While the low-interest-rate environment was probably the fuel behind the recent stock market and real estate value surges, there is no more room to cut interest rates.
More and more currencies are actually dangerously close to deflation, and not just the fringe countries.
Having Switzerland in this list is especially interesting.
I heard stories of people putting their Swiss francs into safe deposit boxes as paper bills now because banks charge more to keep the money in your bank account.
5. To good to be true – When you look at the growth of the stock markets (and housing markets) over the past 8 years (up 133% from 896.24 on Oct 31, 2008 to 2085.18 on Oct 31, 2016), you have to wonder if its time to cash in your chips and call it a night.
Given the above 5 reasons, and with elections around the corner, I think many of us should seriously consider to take a little bit of transaction cost, and possibly taxable sell moment, and park your retirement savings on the sideline for a few months.
Finally, if any of you have not casted your ballot yet, the below chart can maybe help you make your final decision based on the average stock market performance under various democratic and republican presidents: