For the past eight days the DJIA has set new all-time highs. But what does that mean to investors? There is a big difference from the 2007 highs to what we are seeing today. In 2007 the price to earnings was at 30, today it is just below 15. Price to earnings is the valuation ration of the S&P’s current share price compared to its per-share earnings. Interest rates, such as the 10 year, were just below 5% compared with 2% today.
I am always asked is it time to get back in the market and my standard answer is, “If you have money it’s always time to get in the market prudently”. Your tolerance for risk and your time horizon just define how in the market you should be. This has been the most unheralded bull market that I have ever seen. Retail investors are still on the sidelines either dismissing the fact that equities are a viable place to make money or waiting for a pullback to get back in because they have missed the 100% gain since 2009.
This reminds me of the DIY investor that told me when the market goes back up then I will get back in. I called him the other day and now he is waiting for it to go back down.
In March of 2009, risk was at its lowest level. Now we must be more cautious but not having some allocation to equities has more risk than cash; if you don’t want to outlive your assets. Don’t let the doomsday prophets destroy your future, they are rarely correct in their predictions. The fact is unless you have a lot of money 1% interest is hard to make ends meet.
We have a new workshop “Conscious Investing for Peace of Mind” which delves into the minds of investors and why they are their worst enemy when it comes to investment decisions. We will be sending out invitations and also check on our website www.rileywealth.com for more information. We always welcome clients, prospects and guests for our workshops, so it’s a great way to make sure everyone you care about is investing as wisely as you are!