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On a few occasions in the past (last one when NASDAQ was slightly above 4000, IIRC), I advocated investing in stock market, particularly in NASDAQ as it represents most of US technological achievements. As NASDAQ index nears 5000, I am still there. As I was saying in the past, it is only when market overshoots (as it usually does), perhaps around 7000-8000, then it would be a time to become more conservative.
Turns out, my assessment is still underestimating that number. This is something I and most everyone else knows, but it is so simple that I missed it, and only realized after being reminded during an interview with one of market analysts. Here is what I am talking about.
Getting close to the prior NASDAQ record of 5000 or so invariably gets associated with the .com crash of 2000-2001. However, if adjusted for inflation, in order to reach the same level as it was in 2000, NASDAQ has to be around 7000!
What this means is that NASDAQ being at around 5000 is still a long way from the levels seen in 2000, and the market is likely to go through this psychological level with little hesitation. Even at 7000 or so, we will still be at the same level as in 2000. What does this mean in practical terms, at least for me personally? I am still heavily invested in NASDAQ as opposed to being invested in individual stocks (as I've done in the past, and got burned as so many others did), sleep at night without worry, and shrug it off when the market goes down, even by a few hundred points in a few days - only to recover shortly, and shoot higher.
All I am saying is that NASDAQ is still quite undervalued, and the exact time to get in is when everyone else is scared to. In my retirement account, I am being a bit more conservative and have about 40% position in cash and 60% in stock market. Otherwise, I am around 80% in stock market, with about 6% cash, 6% gold (as a hedge for something catastrophic), and a few percent in oil (to hedge against my heating bills).
Turns out, my assessment is still underestimating that number. This is something I and most everyone else knows, but it is so simple that I missed it, and only realized after being reminded during an interview with one of market analysts. Here is what I am talking about.
Getting close to the prior NASDAQ record of 5000 or so invariably gets associated with the .com crash of 2000-2001. However, if adjusted for inflation, in order to reach the same level as it was in 2000, NASDAQ has to be around 7000!
What this means is that NASDAQ being at around 5000 is still a long way from the levels seen in 2000, and the market is likely to go through this psychological level with little hesitation. Even at 7000 or so, we will still be at the same level as in 2000. What does this mean in practical terms, at least for me personally? I am still heavily invested in NASDAQ as opposed to being invested in individual stocks (as I've done in the past, and got burned as so many others did), sleep at night without worry, and shrug it off when the market goes down, even by a few hundred points in a few days - only to recover shortly, and shoot higher.
All I am saying is that NASDAQ is still quite undervalued, and the exact time to get in is when everyone else is scared to. In my retirement account, I am being a bit more conservative and have about 40% position in cash and 60% in stock market. Otherwise, I am around 80% in stock market, with about 6% cash, 6% gold (as a hedge for something catastrophic), and a few percent in oil (to hedge against my heating bills).
