Most of the talking head financial experts have gone on record recently. It is to no surprise that they all agree the current stock market price levels are historically overpriced.
These self-appointed financial experts may or may not be correct. Either way, individual stock market investors should pay close attention to their comments.
Your next investment management decision is not an easy one. Current stock market levels dictate that you at least consider a potential stock market decline.
Amateur stock market investors think about their stock market returns. Professional stock market investors think about how much risk they are taking to get those investment returns.
The last great stock market decline took place between November 2007 and March 2009. The U.S. stock market fell about 51% over that time period. Most individual stock market investors remember that pain.
The historic real estate market collapse followed shortly after. Home owners lost the inflated value of their home prices. Most home owners could not sell their homes before real estate prices declined.
Stock prices and home prices have rebounded over the last few years. It is important to know your investment management options going forward.
What if another historic decline takes place in the stock market? You don’t have to suffer through the same painful event again.
You might not be able to sell your home. Homes are family decisions. And they are very hard to replace. But you can sell all or part of your stock market holdings any day that the stock market is open.
The ability to more easily protect your investment gains is a huge difference between home prices and stock market prices.
Don’t let your 2013 stock market gains be temporary. The stock market may take a sudden turn down. So put a plan in place now to make at least part of your investment gains permanent.
Stocks are much more liquid than your home. And much easier to replace.
Ric Lager
Lager & Company, Inc.
