May 17, 2017 – We are in correction territory! As I have written on my March 24, 2017 blog, stocks are poised to lose 10% to 30% in this correction mode. It may take a while but a dysfunctional White House and the strange behavior of Pres. Trump will hasten the correction. Here is the pattern I see: The Dow may lose 300 pts. today, may gain 200 pts. tomorrow, may lose 300 pts. the day after, gain 200 pts. after that and so on. The Dow may not drop by 2,000 points in one day but it’s coming. As you have seen the behavior of the market, after the Dow initially breached resistance level of 21,000 it did not get back up there for a long period of time. Perhaps only briefly on certain days. What should we do? We have to watch the market carefully. The economy, business and Wall Street are so intricately related that cause and effect are oftentimes hard to define. When investors pull their money out of stocks, where will the money go? When will investors go back to stocks? Will the current gloom and doom news in politics and world events affect consumer spending? The last question is really the most important one because an interruption in consumer spending = recession. And guess what folks? Stocks may drop 60% during the bear market that follows a recession. There is no big problem if you stay in stocks and bonds during periods of corrections since the market should recover relatively quickly. But it will be a total misery for you if you lose 60% of your retirement savings. The stock market will crash, but when? Read the eBook, DOW TO DROP 80% SOON?
You will find out when to get out of equities before the next recession and when to get back into stocks before the start of the bull market that follows a recession.