October 4th, 2017

Stock markets still at record highs. What to do?

By Andrew Craig

Reading time: ~ 2 minutes

Are stock markets over valued or is there more upside from here?

Many stock market indices continue to hit new highs day after day (more detail here).

As each week passes and the S&P500, Dow Jones and other stock markets the world over continue their record breaking runs, an increasing number of entirely sensible and well-credentialed commentators are adding their voices to the chorus of folk saying that a massive crash must be just around the corner.

Only a couple of weeks ago, Yale professor and Nobel Prize winner, Robert Shiller highlighted the existence of plenty of red warning flags with stock markets at these levels and just how expensive the US stock market is in particular. That having been said, he also admitted that he isn't ruling out a market that "...continues to churn out fresh records for months, if not years."

Regular readers of these emails, will hopefully recall that I wrote a series of articles on this very subject earlier this year (which followed a similar series from October 2016). The most recent three were :

  1. All the reasons lots of clever folk have suggested a big crash might be coming (for some time now)...
  2. A number of arguments I wanted to put forward as to why the market may still have significant upside (quite pleased with those at this point ;-) )... and, most important of all...
  3. ...why none of this financial navel-gazing actually really matters for your chances of long run investment success...

Given we have several hundred new readers since I wrote those articles, given that I'm well aware that lots of our existing email subscribers may have missed these articles and given my arguments as to why markets might keep going up have proved out (even a stopped clock tells the time correctly twice a day as they say) - I thought I may as well send you the links to these articles again, not least given that you've probably had too many emails about our new fund in recent weeks...

So... without further ado. They were:

  • S&P 3000? - Back in mid-June I looked at reasons lots of smart people were predicting a crash.
  • ZIRP, Inflation, QE and Other Animals - Two weeks later, I looked at the impact of interest rates, real inflation and why there is a tidal wave of money chasing shares.
  • Are you Riding the Tiger's Tail? - In early August, I explained the power of trend following - and how using it can mean you don't need to worry about market crashes...

If you didn't get a chance to read these before, I hope you find them very interesting and helpful for understanding why shares are at all time highs.