S&P 500 since March 20, 2020 went up 100%, DJI since March 20, 2020 went up 90%, NASDAQ since March 20, 2020 went up 132%. All those 3 major indexes are at the all times high as of November 25th 2021. Let’s take a closer look at the S&P 500 index. From March 20, 2020 until now it is 1 year and 8 months and we have 104% increase in the value of the index. Do you know how long it took previously before March 20, 2020 for S&P 500 to gain around 100% ? Think about this for a second, how long did it take before the panic of March 2020 for the S&P 500 to gain around 100%? It actually took around 7 years for S&P 500 to gain around 100% from 2013 until 2020. What does this tell you? Are companies 7 times more efficient and more productive right now? Did employees of those companies become 7 times more productive than in period from 2013 until 2020? Did we experience some major technological change during last year that increased productivity by 7 times? Absolutely NOT! What is happening around us is that we are flooded with empty money made by the government. We have Build Back Better plan which if it’s approved by Senate it’ll cost $1.75 Trillion and will definitively cause higher inflation and higher taxes for individuals and companies. We are not in a free market economy, this sounds more like a centrally controlled economy by the government. There are many companies which are just floating around thanks to the government subsidies. The same situation is with people, there is many people who should be bankrupt by now but thanks to government handouts they are still in their houses and on the top of that they are not even working because they get more money from government than when they would go to work. All this empty money creates an artificial economy where stocks are at the all time high but at the same time there is huge labor shortage. Stock market right now is a house of cards just waiting to be blown away by some future inevitable event. As of right now it is the worst time to buy any stocks because everything is overvalued and overpriced. Buying stocks right now is not a contrarian buy. Buying stocks right now means pumping the price more and more for the future coming correction. Buying stocks right now means being a victim of the hype on the stock market. Right now is the time to wait and accumulate cash for a future crash which will inevitably come and create great opportunities for great gains. Don’t get carried on by the hype on the market right now, control your emotions. What about inflation, you may ask? Inflation is marginal in comparison to losses which you are going to incur when the stock market goes down 30% like in March 2020. Holding cash right now and waiting for opportunity is the way to go. This will help you to position yourself for great gains in the future.
I’m watching 3 stocks right now: HII, LHX and OLN. HII and LHX are big defense contractors and OLN is a manufacturer of ammunition. Right now the prices of those stocks are too high for me to buy. I’m staying on the sideline and accumulating more cash. Currently I have $30k saved up from my work and keep them ready in my Vanguard settlement fund. As soon as the market goes down I’ll exchange this 30k for stocks of those 3 companies and maybe more different stocks which I’m researching right now but most likely it’ll be those 3 companies because I deeply believe in defense industry being a great investment for many years to come.