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Author: BreckHutHigh ✧  😊 😞
Number: of 15062 
Subject: Burton Malkiel - Barrons
Date: 03/09/2024 3:10 PM
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Barron's Article: The Market Has That Dot-Com Feeling. Don't Bet on a Bubble Bursting.

"Tech valuations are rich. But the stock market is more likely to resemble 1996, when prices continued to rise, than 2000, when they collapsed, the author of A Random Walk Down Wall Street writes in a guest commentary."

While justifying today's sky high valuations in some sectors, particularly the "Mag 7", and dissing comparisons of today to 2000, he ends the piece with the following cautionary note:

"So, what’s an investor to do? Valuations are rich, and long-run equity returns are likely to be lower than we have recently experienced. But the stock market remains the best vehicle for growing wealth. And young people, investing regularly to build a retirement nest egg, can take advantage of dollar-cost averaging. If there is a market decline, they will be buying more shares. And by investing in broad-based low-cost index funds, they will be investing in both the AI revolution and the more modestly priced stocks in the market.

But older investors should hedge against the possibility of a sharp downdraft of stock prices. Those investors who have taken advantage of tax-favored retirement plans and now have substantial required minimum distributions need to reduce their equity exposure. I would advise that money required for 2024 RMDs (or other investments you expect to convert into cash for living expenses) be invested in short-term Treasuries or federal money-market funds. Similarly, 2025 and 2026 RMDs should be invested in short-term Treasuries, where you will be guaranteed a positive rate of return. Investors should never dollar-cost average on the way out because it would mean selling more of your nest egg if markets decline."

https://archive.ph/Y3ALW#selection-519.0-535.714
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