Investors like Warren Buffett and Jeff Bezos are raising their cash. This suggests they might know something we don't.
Are we closer to the market top than we realize?
When making investments, it's always better to have a long-term horizon.
A longer time frame allows you to make better decisions.
What Happened in the Market?
The markets have experienced dramatic sell-offs in recent days due to several factors.
A potential slowdown in the US economy is raising concerns. It is sending shockwaves through global markets.
The recent US employment report showed a no slowdown in hiring and an increase in unemployment to its highest rate in a few years.
Investors speculate that the Federal Reserve may need to lower interest rates due to the economic slowdown.
However, there are also concerns that the Fed may have waited too long to reduce rates.
Goldman Sachs and many others anticipate more aggressive Fed rate cuts in the coming months.
Tech stocks are under pressure from weak earnings and doubts about the AI hype.
Panic has spread worldwide. Japanese stocks fell the most ever in a day.
The Nikkei 225 index plummeted 12.4%, surpassing the decline seen during the 1987 crash.
The strengthening yen against the US dollar also diminishes the appeal of Japanese stocks relying on exports.
Over-Valuations and Opportunities
There's a growing sentiment that the recent stock market rally, particularly in the tech sector, has led to over-valuations.
These factors are driving investors to safer assets. They are selling their stocks, oil, and cryptocurrencies, and buying bonds.
I started making phone calls yesterday to get opinions from other smart investors about what's happening.
The general sentiment seemed to be that this is a great opportunity to start nibbling at the market.
The crypto sell-off is typical in bull market rallies and should be seen as an opportunity to buy assets at great prices.
You don't have to rush to deploy all your capital. But, it's a great chance to find undervalued assets. They should rise in value over the next few years.
My friends and I have started to invest. We'll likely dollar-cost average over a few months while watching the market.
Typically, when interest rates start getting cut, it could signal that a recession is around the corner.
At the same time, rate cuts also show some type of stimulus in the market and should trigger more risk-taking.
With the election coming up, it's interesting to see where the markets will go. They might try to boost the economy before Election Day.
Remember, the biggest opportunities usually come on the most uncertain days.
The best investors know to average into their portfolios and tend to make purchases on days when there are complete sell-offs.
