The market’s upward momentum continues, with the Dow experiencing a seventh consecutive session of gains. All major indices are near or at record highs, reflecting the market’s incredible performance. The overall economy is doing well, and the likelihood of a soft landing is increasingly plausible. However, it’s worth noting that a few standout performers have been driving this market surge.
While this year has been exceptional, surpassing average annual returns in most cases, it is anticipated that the market will start to broaden its gains. Amidst this backdrop, caution is advised, as indicated by the CNN Market Fear and Greed Index currently at 82, signaling extreme greed. As fiscal investors, it is essential to continue investing, conducting thorough research, and staying educated.
A common theme in the current market climate is the focus on value. This strategy allows for potential upside while investing in robust companies capable of weathering market turbulence. To gain market exposure while maintaining diversification, consider ETFs such as Vanguard Value ETF (vtv), Avantis US Equity ETF (AVUS), SPDR S&P Dividend ETF (SDY), and iShares S&P Small-Cap 600 Value ETF (IJS).
While there are compelling reasons to remain invested in the market, it is important to consider the historical reality of market behavior. Year-to-date returns exceeding average annual returns may lead to a reversion back to the mean, or alternatively, earnings must significantly rise to justify current PE ratios. The current S&P 500 10-year ratio stands at 30.9, surpassing the market’s average of 20.2 in the current market era. Therefore, selective buying and caution are prudent approaches.
The market is currently experiencing a Fear of Missing Out (FOMO) phenomenon, making it crucial to exercise caution and avoid blindly following the herd. Risk management remains an essential aspect of being a fiscal investor. The goal is to secure small gains while maintaining confidence in navigating any market situation.
The market remains dynamic, presenting both opportunities and risks. Approach investing with caution, conduct thorough research, and stay informed. By making informed decisions, you can strive for consistent gains and confidently navigate the market under any circumstances.
You should check with your financial advisor before making any investments! All investing has the risk for loss and you should make sure these investments are appropriate for you.