DOW returns 1%
A 1% return in almost six months is not enough to justify the risk of a 40% loss. That should be self-evident.
Think back over the past 15 years. We’ve had two market corrections around 40%. In each case making back the losses took years. Some of the country’s top forecasters warn the next collapse could be bigger without, a new high to compensate for the loss.
We’re used to thinking “the market will always be back”, but that’s just not true. For one recent example, look at the Nikkei, Japan’s leading index.
What kind of return do you expect for taking the risk your savings could get gouged by 40%? We’re used to thinking 8% – 10% is normal. Almost half way through the year and the DOW is up less than 1%. That’s an unacceptable risk; your retirement has already been set back by several years in each of the last two corrections.
Consider, too, the effect of inflation. Last year real inflation was 9%. You need $109 to buy what took $100 last year.
One way of staying ahead of inflation is our option strategy. We employ a method Warren Buffet uses. Already this year our newsletter has pointed to opportunity four times inflation.