Stocks have seemingly climbed higher with little effort for some time now. In fact, the stock market has made it look easy. Ultra-low rates, previous QE, increasing corporate earnings-whatever the primary drivers of higher stocks may be, the bull market is not going to continue indefinitely.
Stocks have recently been moving higher on the idea of lower corporate tax rates and higher profits, less regulation, the potential for higher wages and other factors.
Also at work, however, is another catalyst. Only this catalyst can often mean that the bull market has nearly run its course. This particular catalyst is known as “FOMO,” or Fear of Missing Out.
Markets are a very interesting thing, as they are fueled by the powers of fear and greed. For years, many investors remained skeptical of the stock market’s rise, you could even say they were fearful. They were afraid that perhaps the market was only moving higher due to artificial intervention, such as QE, or that stretched P/E ratios or other metrics meant the market couldn’t possibly continue its ascent for long.
Now a decade into the current bull market in stocks, many of these investors have made the switch from fear to greed. Rather than fearing a potential reversal or collapse in stocks, they now want in on what could be another double-digit return year for the S&P 500. They simply can no longer tolerate the pain of watching the market continue higher without them. There only fear now is missing out.
It has been shown that this stage of a bull market could be indicative of a top being reached-and soon. The market has a tendency to suck as many people in before making a radical change in direction. Looking at recent stock market inflows, there is a significant amount of cash coming into the market at what many would argue is a late stage of the game. The “FOMO” stage could lead to a final run higher, or blow-off top, before the rug is pulled out from under investors’ feet.
Those that are latest to the party may see the biggest financial losses, as they tend to disbelieve the rally is actually over when they are just getting in now. Unfortunately for these latecomers, the selling, once started, can accelerate quickly. Investors that have been long for some time may be quick to take and preserve profits. This can lead to a falling domino effect, whereby more and more investors look to cash in, fueling steep declines in the process.
The stock market is full of warning signs right now. As the euphoric phase gets going, now may be the ideal time to consider alternative asset classes. The window of opportunity in stocks is closing-and closing fast. But as Alexander Graham Bell once said: “When one door closes another door opens.” That other door could very well be gold.
The gold market has been showing significant signs of underlying strength in recent months, and could be in the early stages of a protracted bull market. Once the stock market finally does reverse or collapse, investors will be scrambling to put investment capital to work, and gold could be a primary benefactor.
If you don’t have an allocation in gold, now is the time to consider getting started. If you already own some gold, now is the time to think about adding more. Putting this key asset class to work for you has never been easier than it is today.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our associates are here to answer any questions you may have, and can even show you how to take advantage of your IRA account to buy and hold this important asset.
Don’t wait for the next major stock market crash, or for gold prices to increase before taking action. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started today.Tags: advantage gold, bull market, corporate earnings, fear of missing out, fomo, gold, P/E ratio, qie