Every market is different, and in this current bull market which is approaching the decade mark, determining how the stock market is likely to function in the quarters or years to come can be a difficult task.
With naysayers calling for a bear market for years, investors shorting the market may continue to lose money while those bullish on equities despite current valuations continue to profit.While predicting which direction the market will go is a feat for those with crystal balls and funny hats, a number of strategies to keep investors sane during this period of heightened volatility do exist.
As iconic investor Warren Buffett has often proclaimed, being fearful when others are greedy, and greedy when others are fearful, is a principle which is incredibly important to consider today.
The stock market continues to make new highs, despite a number of macroeconomic and geopolitical concerns which appear to have only gotten worse in recent months. Interest rates are rising, and a number of economic indicators are showing that we may be in for a rough ride in the near to medium-term.
The exuberance which has driven stock prices continually higher may therefore be a signal that now is the time to be cautious, if not fearful, of where the future lies.
Trimming back equity positions and holding larger cash balances is one way to keep enough "dry powder" to be able to be greedy when others are fearful, and selling takes over buying once again.Invest wisely, my friends.