📉The last few weeks have been quite volatile and investors are being fearful again. However, the S&P 500 $SPX500 is only 1% down from all-time high. 𝙄𝙨 𝙖 𝙢𝙖𝙧𝙠𝙚𝙩 𝙘𝙧𝙖𝙨𝙝 𝙘𝙤𝙢𝙞𝙣𝙜?
📈𝙏𝙝𝙚 𝙎𝙩𝙤𝙘𝙠 𝙢𝙖𝙧𝙠𝙚𝙩 𝙞𝙨 𝙣𝙤𝙩 𝙘𝙧𝙖𝙨𝙝𝙞𝙣𝙜. The CAPE ratio is at 37, the only time it was higher was during the Dotcom Bubble. The Buffett indicator is at 200%. Then, why are investors worried? It is because the stocks they like are not doing so great. For example, the most popular stock on Robinhood, Tesla $TSLA is down over 30%. Since the stock market is still near all-time high, it means a market rotation is happening. "Value stocks" are doing better and the NYSE composite is doing better than the NASDAQ Composite $NSDQ100 .
🤝𝙂𝙤𝙤𝙙 𝙙𝙚𝙖𝙡𝙨 𝙞𝙣 𝙩𝙝𝙚 𝙢𝙖𝙧𝙠𝙚𝙩 𝙖𝙧𝙚 𝙨𝙩𝙞𝙡𝙡 𝙧𝙖𝙧𝙚. The greatest investor in the world, Warren Buffett $BRK.B is sitting on a lot of cash. For us to have more deals, more fish in the pool to fish for, we will need a market crash or market correction. Will my portfolio go down? Yes, but since our stocks have low correlation between each other and we have quite some cash equivalents, a market crash won't affect us so much. It will be a good opportunity for us to buy stocks. Besides, I still have to use all that cash gained from my GameStop profits $GME .
💰 The reason why the stock market is so expensive today is because of all the Quantitative Easing from the Federal Reserve System. This has bad consequences as it creates more populism. A stock market crash could lower wealth inequality and populism. A stock market crash is only temporary, in the long-term, the stock market always goes up.
💸 𝙎𝙤𝙤𝙣𝙚𝙧 𝙤𝙧 𝙡𝙖𝙩𝙚𝙧 𝙩𝙝𝙚 𝙨𝙩𝙤𝙘𝙠 𝙢𝙖𝙧𝙠𝙚𝙩 𝙞𝙨 𝙜𝙤𝙞𝙣𝙜 𝙩𝙤 𝙘𝙧𝙖𝙨𝙝 and we cannot always expect the Fed to save it. Therefore, what we always need to do is make sure to invest in businesses with real fundamentals. They are rare but if you know where to look, you will find them. I found GameStop 2 years ago, UNFI this year. And always focus on the long-term.
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