That’s the question on many investors’ minds these days. And it’s certainly one that our team is starting to ponder as the prices of many high quality businesses become more reasonable. However, before we start investing significant amounts of our clients’ capital, there are four things we want to see.
When the Coronavirus began to wreak its havoc on financial markets, the US stock market, which accounts for over half the global market, was more overvalued than at all but one time in its 147-year history. It was only ever more expensive during the height of the dotcom bubble of 1999. Thus, the Coronavirus pandemic struck at the time of the second most overvalued U.S. stock market ever.
As I have said many times, cash is most valuable when nobody has any and the current sell off reflects a mad dash to raise cash as much as it does fears about the pandemic. The time for preparation however is now over and the question for those that heeded the warnings is whether it’s time to jump back in?
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