As you learned yesterday, there are only five assets on Planet Earth. So when someone asks when to get back into the market, they are almost always asking when do I get back into the stock market.
It’s actually simple to tell which of the assets is beating the other four.
The one that is beating the other four always tells you what risk is in the near future. Do you get it?
There’s always a reason why bonds would be beating stocks and visa versa. Or cash would be beating bonds. Or commodities would be beating stocks.
So when you understand the relationship between these five assets you understand where the stability is.
And where is the risk? Meaning is the risk in the near future, far future or behind us. These five relationships tell you that. Are they perfect? Of course not. But after studying all investment approaches I’ve noticed understanding the relationship between these five assets have the fewest false signals. And the most correct signals.
So, let’s say the stability is in stocks (stocks beating bonds, cash, real estate and commodities) then that means the future holds more stability and that is where an investor’s money will be treated best.
And if bonds hold the stability then you know the future has uncertainty and the investor would be smart to stay away from the stock market or have very little allocated to it.
So the answer to your question is understanding how these five assets relate to each other.
And that is what Fearless Wealth Research answers.
We’ve been studying the relationship between stocks, bonds, cash, commodities and real estate for 20 years. And we’ve also studied the previous 100 years of history to notice if people have changed in regards to the risk of losing their money and growing their wealth. And they/we haven’t.
So how do you know when to get back into the stock market?
When stocks are outperforming bonds after underperforming for many quarters or even years.
This is how we knew to get back into the stock market in May 2003 (after being out for 30 months).
And how we knew to get back into the market in August 2009 (after being out for 18 months).
There are many nuances to this answer. Duration. Time frames. Which specific assets to track. Do you include or exclude dividends. And so on.
But these nuances are easily resolved.