Barron’s is a highly-respected weekly news-rag. The cover article on their latest issue proclaims:
NEXT STOP: DOW 30,000
Inside, the article begins with:
The Dow hitting 20,000 was no fluke. Today’s stock prices are well supported by solid prospects for corporate earnings and economic growth. In fact, if President Donald Trump can avoid stumbling into a trade war – or a real war – there’s no reason the Dow Jones Industrial Average can’t exceed 30,000 by the year 2025.
First, it reminded me of Warren Buffett saying . . .”We always live in an uncertain world. What is certain is that the United States will go forward over time.”
Then, I focused on the word “IF” — IF President Donald Trump can avoid stumbling into a trade war or a real war. That is not a snarky comment about the new president. That is a concern that rapid change increases the odds of sudden mistakes. That is also a reminder to investors not to get out of the market too soon. Undoubtedly, sooner or later, President Trump will make a mistake – every president has – and the stock market will “howl bloody murder.” How should an investor react?
IF you are a long-term Buffett-style investor, you will sell nothing and try to buy more stocks as their sales prices decrease.
IF you are a timid investor, you will sell everything and undoubtedly miss the inevitable rally.
IF you are a normal investor, your level of cash will loosely reflect your level of anxiety. As you lose more sleep, you should increase cash . . . but there is never a good time to be 100% cash.
Most of all, avoid the company of timid investors and get ready for Dow 30,000 . . . someday.