Playing Defense with the Stock Market

So far, I’ve kept my head above the waters in the stock market. I haven’t lost any of my initial investments, but I’m feeling a major correction is coming. The general consensus is that at 10-20% drop is on the horizon. For long-time investors planning to stay in the market for years to come, riding it out is the advice I’ve seen. For those of us brand-new well, you might want to sit on the sidelines a bit.

There’s several reasons why many feel a correction is coming. The Covid variant and inflation are two of them, but it’s been known for quite a while that many stocks are overvalued. Similar to a housing bubble finally popping, the stock market has its own bubbles to pop.

There are good solid companies to invest in, that I wouldn’t lose any sleep over, but if all signs are pointing to a major drop, then it doesn’t seem wise to buy into the market right now as a new investor.

Of course, a lot of people have lost a lot of money trying to time the market. The correction may not come for months, and in the meanwhile if you’re sitting on the sidelines you’re not making any money.

For me, personally, I do feel a significant correction is coming soon. I can feel it in my bones. People are very nervous. If I had been investing for years, I wouldn’t worry about it, but since I’m brand new, does it make sense to buy today when all signs are pointing to a drop occurring very soon? Probably not.

I’m going to sit on the sidelines for a bit and hold onto my money, and see how the next few weeks play out.

The good news about a crash or major correction is that when the bottom is hit, it’s an excellent time to buy. A problem with that is it’s hard to tell when stocks are at the very bottom.

And of course, I have to give the disclaimer that I’m not giving financial advice, and I’m not. I could be wrong, but I think it’s common sense that stocks won’t climb forever without being corrected from time to time. It looks a time for another correction is coming soon, but we’ll see.

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