After the market got through January to mid-February, I noticed a sigh of relief in many of my clients for the better part of past six months.  No longer were they on edge about the markets.  We only received two phone calls when Brexit caused the market to drop big time for a few days.

However, since returning from vacation I’ve heard from many clients scared about the bottom falling out… again.  Several have asked me if we’re headed to another 2008, and a few have also recalled the tech bubble burst beginning in 2000.

With the markets hitting new highs lately, the anxiety has again returned.  People are asking whether a major correction is right around the corner. Others are concerned our interest rates will drop to zero.  Still others are concerned about who will occupy the oval office come January.

If you feel confused or uncertain, don’t feel bad.  The analysts also are uncertain.  Two articles proved the point.  The first is from last Saturday’s Wall Street Journal entitled “Stocks Keep It Slow and Steady.”  This column (read here) says that a “repeat of the dot-com bust” seems remote as stocks have been on a slow and steady rise for seven years now.  Some years were great and others fair at best but overall it’s been a slow and steady increase in the market.
 
Many analysts feel that much of the stock market rise is a result of central bankers around the world, including our Fed, keeping interest rates historically low.  Among other consequences, plenty of funds from matured CDs ended up going into the market as folks chase yield by buying dividend stocks.  The thinking by some economists is that, until interest rates really start to rise every quarter, that money will continue flowing into the market, boosting the averages.

The second column from Monday’s Wall Street Journal is titled “Stock Valuations Flash a Warning Sign”.  This column (read here) lays out an argument that stocks are at record highs but corporate profits don’t measure up.  In other words, based on the economy and corporate profits, stock prices are higher than they should be and that we shouldn’t be surprised if the market takes us on a joy ride south.

Again, the argument against a big market correction is the low interest rate environment and that the U.S. market, compared to markets around the world, is kind of like the cleanest dirty shirt in a bag of dirty laundry.

So which way will the market go?  Who knows… my crystal ball is still cloudy.  As always, if a major stock market correction would destroy you financially or emotionally, you probably have too much money in the market.