IS A CRASH COMING

Is a stock market crash coming?

A lot of people are either concerned about a big drop in the stock market or predicting a big decline.  What does the data say?

There is no question that the stock market has been on an impressive run for the last 18 months.  The table below shows the gains of the S&P 500 index for the last 18 months, the last 5 years and the last four decades.

Since the long-term average growth of the S&P 500 is about 10% per year, the stock market tends to correct itself with big declines after periods of above average performance.  The 1980s and 1990s saw very high growth rates in the S&P 500 only to be followed by two crashes in the decade of the 2000s. 

The market has been on a tear since 2010 with average annual growth of 15% per year.  In the first four years of this decade (2020s), the market has grown by 13.4% per year despite the fact that we have had two bear market collapses in those four years. 

Our proprietary Market Valuation Indicator (MVI) suggests that the S&P 500 is currently overvalued by about 6%.  In early 2020, the MVI showed that the S&P 500 was overvalued by about 16%. In then proceeded to drop by 25% in the next ten months.

It is likely that we are due for a pullback in the markets.  But will it be a minor correction or a big decline?  And when might it occur?

Unfortunately, no one can answer these questions with any certainty.  The market is fickle and irrational. 

So, what is an investor to do?

The worst thing you could do is to sell stocks out of a general concern.  Relying on intuition or guessing never works in the stock market.  Also, the biggest gains in growing markets happen at the tail end of the cycle. 

Most of you know that we recommend a disciplined investing approach.  And it is important to stay disciplined now and at all times.

All successful investors need a methodical system or approach that provides above-average growth AND protection against market collapses.  Our Beyond Buy & Hold system is built to give investors both of these things.  It allows investors to be aggressively invested in the stock market BECAUSE it includes an automated approach to get out of the stock market when the risk of collapse is high. 

If you don’t have a safety mechanism like this to protect your retirement accounts from suffering major losses, you are jumping out of a plane without a parachute.  Or to use another analogy, you are walking on a tight rope without a net. 

Why would you risk your life savings this way?

If you want to learn how to protect your investments this way, sign up for a free consultation below.  Let us show you how easy it is to get higher growth AND protect your money against big losses.

FREE CONSULTATION

Happy Investing,

Phil

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Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.

Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.