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Too Big for its Britches?

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The following quotes are all from this recent week…

 

“…the next five months into year-end are going to be extremely treacherous for equity investors.”

~Peter Boockvar, chief market analyst at The Lindsey Group

 

“Stock may get rattled by a shallow U.S. recession starting early next year, caused by slack consumer spending and a slower labor market”

~Nicholas Colas, chief market strategist at ConvergEx Group

 

“It may take months and months for the correction to develop. I don’t look at how low the market drops, but how it rallies. I will look for lower highs and lower lows. Every rally aborts before the previous high, and every decline penetrates and accelerates below the previous low.”

~Mark Cook, Cook Cumulative Tick (when predicting that within 12 months, the market will suffer a 20% or greater pullback):

 

“By all measures, the U.S. stock market is currently frothy,”

~Paul Singer, founder, Elliott Management

 

“High cash levels say the summer ‘melt-up’ is not over yet. But with both institutional and private client allocations to stocks at multi-year highs, we think an autumn correction is increasingly likely.”

~Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch

 

“You remember that kid in elementary school, the one who would argue during a game of tag: “You said you have to tag the person. Well you only touched my clothes, and that isn’t a person.” Remember that kid? That kid is Wall Street.”

~Chris Arnade

 

“It’s like a storm coming. You don’t have to be a weatherman to see clouds.”

~Dane Fulmer

 

“The stock market has recovered so sharply for so long, you have to assume somewhere along the line we will get a significant correction.”

~Alan Greenspan

 

“…if most money is hiding out in the S&P 500, then we are seeing a narrowing of attention by traders. On that point, it is often said that the narrower a rally gets, the closer it is to nearing its end. While this will only be known with hindsight, it is worth nothing that “staircase up/elevator down” dynamics haven’t disappeared. The relative collapse is a humble reminder that advances can be given back in a moment’s notice when you least expect it, regardless of asset class, strategy, or cap.”

~Michael A. Gayed

 

“Two years of uninterrupted gains in U.S. stocks are sowing anxiety among financial professionals, with three in five saying the market is on the verge of a bubble or already in one, the Bloomberg Global Poll found.”

~Lu Wang and Joseph Ciolli

 

“U.S. stocks are now about 80% overvalued on certain key long-term measures, according to research by financial consultant Andrew Smithers, the chairman of Smithers & Co. and one of the few to warn about the bubble of the late 1990s at the time.  According to Smithers’s data, we are now in the third biggest bubble in U.S. history.”

~ Brett Arends, MarketWatch

 

“Warren Buffett’s ‘best single measure of where valuations stand,’ comparing the market value of US companies to the gross national product before inflation, is flashing near record bubble red.”

~Tyler Durden

 

Lastly, some excellent advice from Lance Roberts of STA Wealth Management:

“While we can eventually recover from a market crash—it only took 14 years to get back to even from 2000—we can not regain the time lost to save, and grow, our investments to fund our retirement. It is critical to remember that what the index does from one year to the next is far less important than understanding what the ramifications to your long term investment and financial planning goals will be if you are wrong.”

Well said.  If the chorus of counsel from this article leaves you uncertain about your own investments, let’s chat.

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