RE: When to Buy in New Era of Cryptocurrency Regulation
Hello Crypto Investor,
I’ve really valued your level-headed insights into cryptocurrencies and investing strategy so far and I was wondering what your thoughts are about the US stock market right now.
Based on several metrics (below) I thought that it was over-valued in early 2016 and destined for a correction so I pulled all of my funds into money market and low risk investments like bonds. Obviously I regret that now, considering how the Dow has exploded in 2017 and the early part of 2018, and in hindsight I probably should have kept at least 25-50% of it in stocks. My questions is, would it be reasonable to try moving back into stocks if there is more room to run, or would that just be FOMO investing? I missed out on a lot of gains being on the sideline and it’s difficult seeing the S&P continue to rise. If staying in bonds is better, do you think there is a substantial risk in high-yield/corporate bonds as opposed to US treasuries/money market, especially in light of rising interest rates? I have read several articles that argue LIRP/ZIRP has caused a massive bubble in the bond market and I don’t want to make a bad move twice.
Disclaimer: My main area of expertise is in math/the physical sciences (with some economics background) so I don’t want to step too far out of my circle of competence, and would value your opinion about the current market.**
**I know you cannot offer investment advice, and all decisions are ultimately my own, but again, I would value your insight coming from a finance background.
- Stocks are at historically high valuations (Shiller PE Ratio (CAPE) is currently at 33.9, and Corporate Equities to GDP is at 132.2%, both last seen only in 1929 and 1999)
https://www.advisorperspectives.com/dshort/updates/2017/09/06/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator
http://www.multpl.com/shiller-pe/ - At the time (2016), Industrial Production was starting to dip and I thought that was a sign of trouble, but it has since recovered significantly)
https://fred.stlouisfed.org/series/INDPRO - At the time, YoY Change in unemployment rate was starting to rise but has since recovered.
https://fred.stlouisfed.org/series/UNRATE#0