Stocks are getting hit today, and hard, as rising bond yields fuel selling in equities. The recent concerns over higher yields-which are trading at multiyear highs-is only one issue that stock investors will need to contend with in the months and years ahead.
None of this is to say that stocks cannot keep going higher, in fact, stocks may very well see a fresh leg higher and new all-time highs going into the end of the year. Once the levee breaks, however, look out below. Some analysts have recently suggested that the stock market could see declines in the range of 40 percent, maybe more. That would mean that investors who got into the market in recent years could potentially see all of their gains wiped out, and possibly even then some.
Timing markets is not typically a viable strategy for investors, and there are very few who have been able to do so with any consistency. Smart investors need to recognize, however, that the top may be quickly approaching, and it’s better to take steps now than to wait for the bottom to really fall out.
Investors have been betting on higher equities as economic optimism continues to take hold. A lot of that optimism, however, is likely already baked into share prices. The effects of tax cuts, deregulation and government spending are also likely to fade, and conditions could become ripe for a massive revaluation.
Any way you slice it, the bull market is getting long in the tooth, and stocks are at very expensive levels already. If investors are looking for even stronger earnings next year and the year after, they may be sorely disappointed.
When the next major bear market takes hold, it could be long and downright nasty. A 30 or 40 percent decline in stocks could fuel even more selling, and panic may eventually set in before stocks again find a long-term bottom. The potential risks of a major stock blowout may simply be too high at current levels to justify adding to or even holding significant positions. In other words, now may be the ideal time to build large allocations in alternative asset classes. And what better asset class to anchor a portfolio than gold?
The gold market could potentially benefit from numerous issues that markets are facing including a stock reversal, higher inflation and geopolitical risks. Gold is often bought in times of economic or geopolitical duress, and comes with tremendous upside price potential as well.
With prices still near the $1200 level, now may be the time to build a significant allocation in this key asset class, and doing so has never been easier.
Speak with an Advantage Gold account executive today about the potential benefits of gold ownership. Our account executives are here to answer any questions you may have, and can even show you how to incorporate this important asset class using and IRA account.
Don’t wait for the next major stock sell-off or bear market before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.Tags: advantage gold, bond yields, gold, higher interest rates, Stocks, treasuries