Missed Vauentum’s pre-crash commentary? See here.
Memories of the Financial Crisis are still vivid in our mind.
The framed front pages of the Wall Street Journal reporting the demise of Lehman, AIG and WaMu on those fateful days in 2008 drape the walls of the Valuentum office as a stark reminder of the fragility of the financial and capital markets. We’re not alone. Many investors remember seeing their savings cut to pieces at the depth of Financial Crisis.
The Dow Jones Industrial Average (DIA), in collapsing 531 points Friday, has captured those same individuals’ attention…again. They haven’t forgotten the pain of the years of the credit crunch when they wondered whether they’d ever be able to retire during the dreadful days of early 2009. Some had thought they’d be in retirement by now, only to find themselves still working into their golden years. Never will they let their holdings drop that much again. They simply can’t afford the capital risk.
Those same individuals are evaluating their portfolios this weekend.
With their retirement accounts having tripled since the panic March 2009 bottom, investors that survived the pain of the 2008-2009 credit crunch and the Great Recession won’t be sticking around to show off how much more pain they can endure. They’re happy. They’re comfortable. Leaving their portfolios fully exposed in this still-overheated market may be too much to bear for anyone. The market has been on an upward slope for more than six years. Why can’t we have two or three years of negative performance?
Even if Monday or Tuesday offers a reprieve in the form of a short-lived bounce, it’s our view we’re headed much lower. The technicals don’t support a move to new highs, valuations don’t support a move to new highs, and sentiment certainly doesn’t support a move to new highs. We know what it’s like to be an analyst on the wrong side of the market, but Morgan Stanley’s price target hike of Tesla’s (TSLA) shares to $465 from $280 last week may define this stock market peak, much like Netscape’s IPO defined the dot-com bubble years of the late 1990s.
Get your gear ready. We’re in for some tough sledding.
Related Tickers: SPY
Image Source: R∂lf Κλενγελ