A Correction Is Due And It Could Be Deep

Aug. 17, 2021 12:14 PM ETSPY, QQQ, DIA, SH, IWM, TZA, SSO, TNA, VOO, SDS, IVV, SPXU, TQQQ, UPRO, PSQ, SPXL, UWM, RSP, SPXS, SQQQ, QID, DOG, QLD, DXD, UDOW, SDOW, VFINX, URTY, EPS, TWM, SCHX, VV, RWM, DDM, SRTY, VTWO, QQEW, QQQE, FEX, SPLX, EEH, EQL, QQXT, SPUU, IWL, SYE, SPXE, UDPIX, JHML, OTPIX, RYARX, SPXN, HUSV, RYRSX, SPDN, SPXT, SPXV1.65K Comments

Summary

  • The stock market is historically overvalued.
  • The stock market is overbought on long-term charts.
  • Large caps stocks can easily correct 20%-30%, certain Meme and Zombie stocks could be much worse.
  • The Fed, as always, will play a pivotal role in how deep of a decline we see, watch the taper closely.
  • Raise cash quickly to the high end of your asset allocation policy.
  • This idea was discussed in more depth with members of my private investing community, Margin of Safety Investing. Learn More »
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Any look at an investment should start by asking about what the risks are. For context, we often look at the broader S&P 500 (SPY) which represents most of the market capitalization in the U.S.

Last year I warned that


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This article was written by

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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