Looking for Signs of a Correction

Someday this bull market will take a substantial pause.  Unfortunately, I don't know when that will be.   In the meantime, it is prudent to anticipate this inevitable correction of unknown timing and duration.  Here are some signs I'll be looking for:
  • Exuberance - This is when everybody is excited and talking about how well they are doing in the stock market.  I don't see much of this happening yet.
  • FOMO investing -  This is when people start investing more in stocks because they're afraid of missing out on what everybody is exuberant about.   It seems to me there is still a lot of cash on the sidelines.
  • All stocks advance -  This is when good, as well as bad stocks keep going up.   There is no differentiation as investors put money into index funds/ETFs, driving up the valuation of all stocks.  Not happening yet, since there are a number of stocks still near or at the 52 week lows.
Net,  the current administration has not yet taken any concrete actions that would justify the optimism of the stock market.  If we seen part of all of the three above points in the next few months, I will start expecting a correction to be coming soon.

For more on The Practice of Personal Finance, check back Wednesdays for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2017 Achievement Catalyst, LLC

0 Response to "Looking for Signs of a Correction"

Post a Comment