Is the stock market due for a correction?

If you want success, do the opposite of what the media tells you regarding stocks.. I've noticed a pattern that the media tries to influence people into panic selling or panic buying stocks. If there is a mainstream media article which implies a stock is set to crash, it usually goes way up instead. If an article says a stock is a goldmine to buy right now, guess what, it will go down temporarily. The stock market lives off of panic buying and selling. I have made a plethora of money using this methodology of fading (doing the opposite) the fake news media regarding stocks.

Stock market to gdp has never been higher in the history of the stock market. So are we in a bubble? Yes. Does that mean we are due for a correction? Probably, but when it will happen is anyone’s guess. It could be that the stock market will continue to go up due to asset inflation from unprecedented monetary supply increase. It could also violently crash due to a black swan event and everyone pulling out their highly leveraged positions (margin lending is also at all time highs). My 2 cents are to own no bonds, cash isn’t good, the stock market has some upside potential with good potential for a correction, and commodities and crypto (if crypto’s your thing) are a good hedge, along with real estate. Not an easy time to allocate

Anyone who tells you they know what the market is going to do is a huckster. The market is priced where it’s priced based on all current available information.

https://en.m.wikipedia.org/wiki/Efficient-market_hypothesis

appointment with broker wrote:

I have heard a report that the stock market might soon make a correction and could drop as much as 10%. If that is likely to happen then this would be a bad time to invest, correct?

I am meeting with my broker this week with the idea of investing more, but I might cancel.

Advice?

1) A correction is a 10% or more drop...so, a drop less than 10% is NOT a correction.

2) Investing more should have to do with: Do you have extra money with which to invest? Are you debt free? Do you have 3-6 months of expenses in an emergency fund? Are you more than 5 years away from retirement?

3) NEVER postpone wanting to invest more based on the fear that the stock market might correct. So what if it does? If you WAIT for it to do so before you invest more, you will likely miss that bottom, because you will wait for it to tick up before you do so. If you don't need the money now (see #2 above), then invest. Over time you'll come out ahead, even if you take a short-term loss.

STEVE THE ADDICT^^^^^^"""""""" wrote:

If you want success, do the opposite of what the media tells you regarding stocks.. I've noticed a pattern that the media tries to influence people into panic selling or panic buying stocks. If there is a mainstream media article which implies a stock is set to crash, it usually goes way up instead. If an article says a stock is a goldmine to buy right now, guess what, it will go down temporarily. The stock market lives off of panic buying and selling. I have made a plethora of money using this methodology of fading (doing the opposite) the fake news media regarding stocks.

Bythebay12 wrote:

Stock market to gdp has never been higher in the history of the stock market. So are we in a bubble? Yes.

Public companies profits as a share of gdp have never been high either so that’s a useless metric to predict a crash.

capsicum wrote:

Bythebay12 wrote:

Stock market to gdp has never been higher in the history of the stock market. So are we in a bubble? Yes.

Public companies profits as a share of gdp have never been high either so that’s a useless metric to predict a crash.

*Never been higher

Flagpole wrote:

appointment with broker wrote:

I have heard a report that the stock market might soon make a correction and could drop as much as 10%. If that is likely to happen then this would be a bad time to invest, correct?

I am meeting with my broker this week with the idea of investing more, but I might cancel.

Advice?

1) A correction is a 10% or more drop...so, a drop less than 10% is NOT a correction.

.

I am not sure why you would make false statements Flagger. Of course a drop of 9.9 percent is a correction. Even if it is not technically a correction there is no use in playing these word games. If the market drops 10 pct in one day they call it a crash. But if it dripped 9.5 pct. off in 2 days the guy’s investments have been corrected for sure, even if you do not want to call it a correction.

Ah yes, the old “the greed this time is different”

appointment with broker wrote:

I have heard a report that the stock market might soon make a correction and could drop as much as 10%. If that is likely to happen then this would be a bad time to invest, correct?

I am meeting with my broker this week with the idea of investing more, but I might cancel.

Advice?

Right now it seems everyone is putting their wealth into anything other than the $. Stocks seem a reasonable options and companies are doing pretty well. While a correction is possible I am starting to doubt this more and more each day that Biden works to devalue the $. Even if the market takes a dive, everyone will throw all in at that point because they don't want dollars. So, even if you put money in for the long term now, it will still be good. You should just plan to throw a lot in once things tank if they do, but they may not at this point. Money is more risky than the market.

appointment with broker wrote:

I have heard a report that the stock market might soon make a correction and could drop as much as 10%. If that is likely to happen then this would be a bad time to invest, correct?

I am meeting with my broker this week with the idea of investing more, but I might cancel.

Advice?

you are obviously hesitant.

Two questions - what is your investment horizon (how long do you intend ideally to leave the money in the market) and what level of risk are you comfortable with?

Assuming you can leave it there in case of a correction and won't need to sell at a loss due to some bill coming due, I would suggest you split the difference. You seem concerned, so put a third of it now or maybe even half. Then wait until you are comfortable putting the rest in.

In a nutshell, the fact that you are deliberating indicates you are not 100% committed to buying at the moment. So buy a portion.

Dollar cost averaging is a useful strategy to mitigate risks like this,

Good luck,

capsicum wrote:

Bythebay12 wrote:

Stock market to gdp has never been higher in the history of the stock market. So are we in a bubble? Yes.

Public companies profits as a share of gdp have never been high either so that’s a useless metric to predict a crash.

Well, is this also useless?

Basically, yes, that is useless as a predictor. Rolling 12-month earnings (E) are low because of covid, price (P) is high because the pandemic will end, therefore P/E is high. This does not indicate what will happen in the future.

Thanks for all the responses.

I am retired and in my later 60's. I am pretty comfortablewith a good pension, retirement accounts I haven't touched yet but I have money wasting away in accounts (savings & CDs) that are not doing anything.

My broker (has has done well with one of my retirement accounts) will always give me the historical record of stocks, tell me you can't predict and imply that if you don't need it, its always good to invest. My wife and I just don't spend that much, its not our lifestyle. It might sound weird but our lifestyle, how we live and spend money will not change regardless of much more is in our accounts. But I still would hate to put money in and lose 10% of it that year of investment.

I did buy I bonds which are safe. I tend to avoid risk so I did miss out on much. I would dump money into stocks right after the correction but most seem to think trying to do that is a bad strategy.

Bythebay12 wrote:

Stock market to gdp has never been higher in the history of the stock market. So are we in a bubble? Yes. Does that mean we are due for a correction? Probably, but when it will happen is anyone’s guess. It could be that the stock market will continue to go up due to asset inflation from unprecedented monetary supply increase. It could also violently crash due to a black swan event and everyone pulling out their highly leveraged positions (margin lending is also at all time highs). My 2 cents are to own no bonds, cash isn’t good, the stock market has some upside potential with good potential for a correction, and commodities and crypto (if crypto’s your thing) are a good hedge, along with real estate. Not an easy time to allocate

This sums up my opinion. It is overvalued but there are so many variables at play that it could continue to rise for quite a while. I’m not adding outside my 401K contributions currently, but I’m not sellling either.

I’m paying down my mortgage even as home prices soar. I feel like I missed the crypto run and I just don’t believe in it long term to ride the wave, although I get the appeal.

Trump said it would crash if Biden became president. So maybe?

By "correction" you mean a crash

Hardloper wrote:

This does not indicate what will happen in the future.

Didn't ya boy Trump tell us the stock market would crash the moment Biden took office?

“I won the election, the markets went up thousands of points, things started happening,” Trump said at a rally here. “If, for some reason, I were not to have won the election, these markets would have crashed. That will happen even more so in 2020. You have no choice but to vote for me, because your 401(k), everything is going to be down the tubes.”

"Is the stock market due for a correction?"

It almost *always* is. Optimism and a desire for action ("make something happen") tend to mean that overall there's more more money in the markets than there "ought" to be.