Reasons for caution
- “If there is no recession by 2020, we will have lived through the first decade in 120 years without one. But for that to happen, everything has to go right.” — John Mauldin, chairman of Mauldin Economics, in an article on his web site on 4/9/17 in which he analyzes multiple economic indicators and explains why he believes investors should be cautious right now. Read more.
The market can’t always be above average
- “There is no doubt that the market can grind higher to more dizzying valuations. However, there is also strong historical evidence that this market will normalize to average valuations.” — Michael Lebowitz, founder of 720 Global, writing on the See It Market blog that markets don’t stay overvalued indefinitely. Read more.
Taking the long view
- “The stock market is almost 11 times higher today than it was in 1990. So reading a 1990 article about what a 0.5% decline meant for investors makes you want to yell, 'None of this matters! Just take a long-term view!'” — Morgan Housel, writing on the Collaborative Fund blog on 4/5/17. Read more.
- “Over the last few decades, investors’ timeframes have shrunk. They’ve become obsessed with quarterly returns. In fact, technology now enables them to become distracted by returns on a minute-by-minute basis. Thus, one way to gain an advantage is by ignoring the ‘noise’ created by the manic swings of others and focusing on the things that matter in the long term.” — Howard Marks, chairman, Oaktree Capital Management, in a presentation called “The Truth About Investing.“ See the full presentation.
The dangers of getting out
- “No one really knows if we’re in the seventh-inning stretch, the bottom of the ninth, or heading into extra innings.” — Author/blogger Ben Carlson, writing on Bloomberg View on 4/21/17 about concerns the market may be overvalued and how market valuation metrics tend to be poor timing indicators. Read more.
- “It takes extraordinary self-discipline to admit having made a market-timing error and to get back into equities before too much damage has occurred. Historically, few have managed that feat.” — John Rekenthaler, VP of Research for Morningstar, writing on 3/21/17 about the difficulty of reentering the market after fear drove you out. Read more.
Who are you listening to?
- “Chasing nonsense (false narratives) is not an effective investing strategy.” — Charlie Bilello, director of research at Pension Partners, writing on 4/18/17 about the dangers of too readily accepting analysts’ explanations of the market. Read more.
The retirement gamble
- “Phyllis stops playing roulette when she runs out of money but, unlike roulette players, we can’t stop being retired when we go broke. We have to figure out how to continue playing retirement until the end.” — Dirk Cotton, writing on his Retirement Café blog on 4/19/17 about the similarities between gambling and retirement planning. Read more
An undervalued asset
- “Some people (such as tenured professors, doctors and government employees) have stable jobs, and thus their labor income is almost like an inflation-indexed annuity. In other words, it acts very much like a bond. Other people (such as commissioned salespeople and construction workers) have labor income that is more volatile, and thus acts more like equities.” — Larry Swedroe, director of research for the BAM Alliance, writing on ETF.com on 4/12/17 about incorporating “human capital” (your earning ability) into your financial plan. Read more.