However, it reminds me of two other times in my lifetime where unexperienced people get involved in investing with little to no knowledge. The first was the dotcom era in the late 90s and then the real estate market before the financial crisis. Both ended in severe bubbles which in hindsight were obvious. Notice that I did not include the Cryptocurrency bubble of 2018 in the list as the euphoria I see today is worst than that one as most hesitated to invest in something they did not understand.
Everyone all of sudden understanding the stock market. Many think because they like a product or service from a Company that it will be the next best stock to buy. There is a blatant disregard to valuations at the moment as well. The best proof is the latest round of stock splits we have experienced. Most of the new traders that talk to me think that the stock is getting cheaper just because its price per share is going down! Even when I explain it to them, they still say that more people can now afford it! The miss the fact that investors also have more to sell and the fact that fractional stock ownership is already possible to afford positions in stocks.
This continued divergence of the markets and the economy is concerning for me. While I continue to lose the opportunity of gains, I still feel that the right strategy at this point is to protect capital and have cash. My thought is to continue building a strong personal balance sheet by building assets and reducing liabilities so that the future can present opportunities to take advantage of. due to that position. It has been four years of being wrong so far so I am still hesitant to bet against the market but that opportunity may arise as well. Good luck to all out there!
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