No. of Recommendations: 3
Wendy wrote:
I wouldn't be putting fresh money into the stock market, which is in a bubble, just ahead of a recession...Study the history of bear markets following the collapse of a bubble. These don't resolve quickly.Right, I agree. My target for investing isn't the bubblecious S&P 500, rather the average/slightly below average valued small cap sector. We've been talking about the difference in relative valuations of the sectors over the past year or so in this thread:
https://www.shrewdm.com/MB?pid=441105106I don't aim to buy at the low, just to buy at a good value. I got myself burned during the Covid recession/bear waiting around for stocks to hit lower level, when instead they skyrocketed with me on the sidelines.
As I wrote in the post linked above, I'm a fan of small-cap value and while I don't have readily accessible charts to show it, I'm sure it benefits from the same relative valuation advantage as small cap in general, possibly more so.
When stock market volatility increases, small cap, and small cap value often have outsized moves compared to large cap. I.e. earlier today the S&P 500 was down 1.4% compared to Vanguard Small Cap Value ETF (VBR) down 2.2%.
So, we're at a spot where relative valuations greatly favor small cap, absolute valuations of small cap are a bit below the long term average, and volatility is picking up.
If this correction turns into a bear market, it will be an excellent time to buy small cap/small cap value, IMO.
Timing the purchase(s) is tricky. I don't have any detailed plan, I'm just going to start some machinations to make some funds ready to invest.
