I have viewed, researched and listen to several Advisors' assessments and approaches relative to a stock market 'correction'.
Current Situation:
- The current market is over priced with a PE ratio well above historical averages
- Essentially all stocks are over-priced when viewing PE ratios
- Berkshire Hathaway currently has 38% of their investment assets in cash
- Advisors are split: insure a total diversified portfolio and ride it out or have a third of your (diversified) assets in cash and seek opportunities in the dip
- In either option, it is important to have an emergency fund to get you through the 'recovery' period without liquidating principle
- Several market analyst firms are now predicting that 2021 will not experience a correction and look forward to a slight inflation increase, improved unemployment and positive GDP
- (update) Inflation risk looming and effects on the housing market potentially at risk for today's buyers (low rates/high prices) needing to sell (higher rates/lower prices) as future buyers manage purchases via monthly payments costs.
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