Is the Market TOO High?

Is the Market TOO High? by Jeff Holland{1:45 minutes to read} The market is a giant processing machine that sets prices by aggregating information from investors around the globe. Future, unknown news is what ultimately moves the market; therefore, the only way the market can be viewed as “too high” is with hindsight. We as people make new highs every day in our lives (our age).

Headline markets like the S&P or Dow Jones may appear too high—but really aren’t when viewed in the context of a diversified global portfolio.  

So, is the current market too high? No.

And it’s not too low either. Right now, we would say it’s fairly priced. But because other markets are not as high, global diversification is necessary.                         

Humans are inherently risk averse—particularly when it comes to investing. When the markets go up, people want to get out; and when the markets go down, people still don’t want to invest—because those responses appear safe.

The truth is that more money has been lost trying to predict the next downturn than has actually been made on the downturn.   

Our firm does not try to outguess the markets. The most important thing to do is trust market prices—like we do with everyday items such as gasoline, eggs, milk, etc. The market is no different, and its movement is not wrong.

Emotion is not a scientific tool. With research, financial science, and global diversification (that can include bonds or fixed income), portfolios preserve over time—with vigor.

Jeff Holland

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