Beware Buffet’s Words: These 3 Critical Stock Market Indicators Signal Huge Losses Ahead
Last month, I wrote a piece about Warren Buffet’s favorite stock market metric and how it was signaling huge losses ahead.
If you haven’t read it yet – you can here. It’s even more relevant today.
And though Buffet’s favorite market indicator’s signaling huge danger ahead for investors – he just recently preached that stocks are still attractive.
This seems rather contradictory if you ask me. . .
Even though his favorite market value metric is at an all-time high – more so than during the DotCom bubble and Housing bubble. And with the S&P 500, NASDAQ and Dow Jones Index at record levels – Buffet’s still recommending stocks.
But, here’s the best part: he went on to say that he believes there will be another stock market crash eventually.
So, why does he talk about buying stocks when he’s expecting a coming crash?
His reasons are pretty simple: investors can’t time when the market will crash. So instead of sitting on the sidelines – waiting and missing the upside – just buy now. And when market prices do crash eventually – which he acknowledges they will – you can simply buy more at lower prices (also, he adds, compared to bonds – stocks are more attractive).
I kinda-sort-of agree with him. It’s not the best idea to try and time a market crash, as many value guys call it a ‘fools errand’.
There’s always that one person (we all know them) who thinks they will sell out right before prices collapse. But in reality, it never works out that way.
History’s littered with the corpses of investors and the hedge-funds that thought they could do this.
So instead of trying to time things accurately – just measure the potential risk and reward.
…click on the above link to read the rest of the article…
