“What is the market going to do?” That’s the first question everyone asks when investing comes up.
In the short run, the answer is momentum-driven. Right now, in spite of excessive valuations and economic uncertainty, the market is very strong. The uptrend that started in November is going smoothly as time passes, and there is no reason for the prices to fall.
Eventually, there will be, but for now, there is no sign of a meaningful pullback on the near-term horizon.
In the long run, the combination of cash flows, valuations, and interest rates suggests that we are looking at a decade or so of weak returns.
It has happened before with great regularity, and we are due, if not overdue, for a period below average great regularity and we are due, if not overdue for a period of below-average returns.
Investors in need of higher returns on their money have two strategies they need to be considering now before the trend of the market changes course.
Let’s take a look at both of them in turn…
