Why are share prices so high and what is an investor to do?
The stock market seems to be hoping for the best rather than planning for the worst. Since we are responsible for people’s financial lives, it is prudent that whilst we continue to hope, we also plan for the worst. Prior to the pandemic, we were concerned about storm clouds gathering on the horizon so we reduced risk and continued to do so as the crisis materialized. As a result, cash positions have accrued as we look for opportunities.
Normally, terrible headlines create terrific investment opportunities. However, not this time: Amidst a tragic pandemic, with the nation’s streets awash with the red ink of a financial catastrophe, the markets are higher than at the start of 2019, and way higher than before President Trump introduced his tax cuts. Warren Buffet has a lot of cash on his balance sheet, indicating he is not finding bargains at these levels either.