Caution and preparation is the message. It is one that I have been yelling. Consider becoming more defensive in your approach. Many of the massively overvalued stocks, and/or incredibly debt laden companies will have to face a tough future. More and more countries are also waking up to the anti-trust business models many companies can use in the US. Not only this, as discussed before for many companies stock buyback programs seem to be what is driving stock prices higher. Not sales or fundamental growth. It is a reflection of the company not seeing where else to put money but back into its own shares. Of course, this is a negative view. Plenty of companies buyback shares for positive reasons, as there is no other place providing the same return, not even Research and Development.
”The equity market has some way to go for the next year to two," Pinto said in an interview with Bloomberg TV. "But then, if there is a correction, it could be a deep correction. It could be between 20 and 40 percent depending on the valuations at the time. The most important thing for someone like us is just to be prepared."
The main concern is inflation with interest rate hikes expected in the next few quarters. Even if they can control inflation to some degree one can pretty much guarantee that your salary will not be inflating. Today a household of two workers makes roughly the same as one income earner in the 1950’s.