Market and underlying economic rise-and-fall cycles are real and inevitable. Equities have become excessively overvalued, based on the fact that buyers were looking to a future where earnings would catch up to and surpass the current inflated valuations. With COVID re-emerging, that future and the timing are jeopardized. Confidence is lost. So, given the run up/gains, investors and traders are prone to take profits. And then wait for buying opportunities, once the view forward becomes clearer, and confidence restored. Add to this a level of inflation not seen for quite a while. Add to this that the Fed has been propping up many companies by buying their debt, something that will not continue. Add to this a level of tension resulting from an emerging world power that challenges the status quo. So, yes, challenging times. More so for a trader with a short window than an investor with a long window. The solution? Always seems best to invest in solid companies at attractive valuations and hold them until if and when they prove themselves unworthy. Diversify and stay balanced. And keep cash on hand for when the cycle is down, so you can buy those solid companies at solid valuations. Don't swim against the current. The current always wins.
