Happy Super Bowl Sunday!
A lot of concerned people asking me “What’s Next” in these markets?
Maybe a good sign for Whitewater Wealth that it is not my clients asking!
So for existing clients, consider this an update.
For interested friends, neighbors and random readers, enjoy!
Markets fell big Friday after a tough week.
Dow Jones mini -744.00
25428.00 -2.84 2/4/2018
Futures trading in Asia suggest a similar drop as US Markets open Monday morning.
These contracts often show declines on Sunday afternoon that are not realized Monday morning, however that is how they are priced Sunday afternoon.
For over a decade this kind of drop has been remarkably absent.
The last two years I have been increasingly concerned about the FUNDAMENTAL valuations of most major US stocks and the quality of debt globally.
There is no question that by most mathematical measures, share prices in the US markets are historically very high.
These concerns are reflected in many of my recent blog posts.
Fortunately, we are well positioned for potential negative outcomes.
Here is the basic checklist for reviewing client allocations.
Cash and very short term bond positions provide liquidity to cover living expenses. CHECK!
Eliminating exposure to longer term debt (over 5 years). CHECK!
Limit exposure to market capitalization weighted index funds. CHECK!
Equity investments weighted to free cash flow and dependable income companies? CHECK!
Hard asset exposure to hedge bond market and currency risk? CHECK!
We are positioned for higher interest rates and falling bond prices.
We own legacy stock positions in good solid companies often paying secure and growing dividends.
Silver will hedge against a panic trade situation and the inevitable long term decline of the US Dollar.
Some of you may see a sale of a bond fund position this week as we raise cash and reduce risk.
As we watch these markets get more volatile, seek opportunity.
Enjoy the Game and have a great week!