Broker Check

Market Uncertainty and Euphoria

| June 21, 2017
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The DOW has now eclipsed 21,150 as of this writing, and most investors are as happy as can be, but this isn’t the first time we have been in a state of euphoria. The question now becomes, “Where do we go from here?” Market uncertainty is at an all-time high as our President tries to put in and change policies. Just a few days ago Donald Trump announced the United States would be pulling out of the Paris climate agreement, and what do we see out of the stock market? Nothing. The DOW is up 50 points today. Another win for investors, right? Quick history lesson; from the early 1920’s to 1929 what happened to the stock market? It tripled. Why? Yes, the economy was doing well, but the main reason for continued growth in the stock market was because traders and institutions were taking risks in companies believing there wouldn’t be any downturn or correction in their current environment. Sure, that was almost 100 years ago, “so much has changed since then.” Fast forward to the late 1990’s to 2007, the real estate industry is absolutely booming. Housing values are soaring; it is extremely easy to borrow money at reasonable rates. Therefore, lenders, bankers, real estate investors begin taking risks that are unprecedented in their industry because of the same belief that the only place we can go is up. Well 2008 shows otherwise, home prices fall and the stock market corrects, most likely losing a large percentage of your hard-earned portfolio. And alas, here we are again, starring at an 8-year bull market, with the same common denominator, euphoria. Why do I bring up these painful memories? So, that we stop allowing history to repeat itself. Take the initiative to reach out to a financial professional and ask the question that no one is asking. “What if we have another correction? Is my portfolio protected? If the stock market bubble pops, what happens to my portfolio? Are there investments that perform even if the market collapses?” Alternative investments are a good place to start. What are alternative investments? Investment vehicles that do not have a correlation to the market. For instance, if the market goes up 200 points tomorrow or down 500 points tomorrow, this asset class is unaffected. While not all portfolios have a place for alternative investments, it is important to look at how they can disconnect you from the stock market and help produce income for you. Now this article was not written to provide all the answers, but merely to enlighten questions that you should be asking, and a place for you to start. Take the time to reach out to someone you trust, and get some much-needed answers for yourself. If no one you know specializes in alternative investments, feel free to learn more on our website www.lcore.com.

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