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Musings on the Current Market January 29, 2014

Posted by shaferfinancial in Finance.
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I have been answering questions from some folks about my opinion on the current stock market.
Let it be known, I have no idea short term the movements of any market. However, I do have some opinions about what we are seeing.

The market is very choppy and the big question is if we are seeing a typical pull-back in a bull market or this is the start of a large drop? The market is reacting to some companies reporting lower growth in revenue in many cases based on weakness in China. Europe is starting to rebound and the American economy is still growing steadily. But we have been on a tear lately with stock prices going up substantially over the last 3+ years. Highly varied reporting in earnings the last quarter of 2013 is starting to become apparent.

If I had money in the market that wasn’t producing substantial dividends I would start to remove that market risk from my portfolio. I can not tell you when or whether the market will take a big drop, but I know it is coming along over the next few years.

For those of my clients that we have removed the downside market risk with EIULs and annuities, you are situated perfectly for the coming few years and can sleep well at night. For those of you still having significant market risk now is the time to really consider if that is what you want to do. For the young there will be time to recover, for the older set, not so much.

For me, I will ride with my Berkshire Hathaway because it overproduces in poor markets. It is the poor market where Buffett shines. The rest of my portfolio serves me up with spectacular dividends to wait out the market drops. My EIUL won’t go negative if the market does. So the bottom line is that I feel comfortable where I am now.

Just be warned that if the choppiness continues the risk goes up for a major market correction. So the risk has gone up for those of us in the market.

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Comments»

1. gregturn - January 29, 2014

I am looking forward to more discounted purchases coming. As Warren Buffett has said, those with the cash in the bank will be ready.

2. Ups and downs of trading stocks | The Wealth Building Society - March 13, 2014

[…] with emerging markets, a facet of investing I’m not really familiar with (yet). Dr. Dave posted an article a potential market correction coming in the next 1-2 […]


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