Did any of you foresee the pop of the NASDAQ bubble back in ’00? Or the fall of the S&P 500, then, too?
I began liquidating stocks in March -April 2000 in order to generate a down payment to buy a second house. SO, yes, I did. Of course it was mostly luck as I didn’t see stocks falling as much as they did.
That said, I’ve always kept a healthy chunk of my investments in stocks (between 50-80%) primarily in index funds. It has worked out OK. I have trimmed it down to ~65% over the last 12 months (unfortunately, at least in the near term).
Stocks are not nearly as overvalued as some here are led to believe. P/E ratios in the 17-20 range for S&P 500 in a 5-6% interest rate environment is nearly properly valued IMO. That is based on fundamentals, not psychology.
Sure stocks are vulnerable to a slow-down in the economy and could easily fall by 20% should we hit recession. But, in general stocks are not as overvalued as housing was in 2005.
