| WEEKLY ROUNDUP How to Survive Shark-Infested Markets VIEW IN BROWSER Hello, Reader. Investing in the stock market during President Donald Trump’s second term feels a bit like swimming off Amity Island – the sunny, fictional beach town from Jaws. The sky is clear, the water is calm, and the lifeguards assure everyone it’s safe to frolic in the surf. But then… Dun dun… dun dun… dun dun… Cue that ominous, staccato music. An attack is nearing. And this shark’s name is “Tariff.” Every time the market starts to relax, every time the indexes edge toward complacency, that fin slices through the surface – a presidential pronouncement, a trade threat, a sudden “Liberation Day” declaration – and the water turns red. Stocks hemorrhage trillions in value. Fear ripples through every sector. Then, just as suddenly, the shark vanishes. President Trump reverses himself, the terror subsides, and investors wade back into the water in as if nothing happened. As of today, for instance, Trump and Chinese President Xi Jinping have agreed on a preliminary framework for a trade deal ahead of their scheduled meeting later this week. What will happen later this week is anybody’s guess; even the shark may not yet know. And that means that the predator never truly leaves. It merely circles deeper, waiting for the next opportunity to strike. This pattern is the new rhythm of the Trump market. Each abrupt policy pivot takes a devastating bite out of stock market values and drags them into the deep. Horrified investors run for their financial lives… until the immediate danger passes. What makes this volatility especially menacing now is where the market stands: balanced on the highest valuation cliff in modern history. The Shiller CAPE ratio is flirting with all-time highs. The CAPE – short for cyclically adjusted price-to-earnings ratio – is a valuation metric developed by economist Robert Shiller of Yale University. It’s designed to assess whether the S&P 500 is overvalued or undervalued relative to historical norms. At present, the CAPE ratio is hovering near 39.5, which is higher than before the 1929 crash, higher than before the dot-com crash, and more than double its long-term average of 17. The market, in other words, is priced for perfection — for smooth seas and fair winds and shark-free sunbathing. When valuations are this inflated, even a small shock can rupture confidence. A trade war threat, a geopolitical misstep, a retaliatory tariff from China or Europe – each one is a dorsal fin on the horizon. When stocks are priced for perfection, anything that reminds investors of risk can tear through sentiment like a great white through a surfboard. That is what makes the current environment so treacherous. The market isn’t merely overvalued – it’s fragile. Each day it skims higher across the glossy surface of record earnings multiples, complacent volatility, and speculative liquidity. So yes, the water still sparkles. The indices shimmer at all-time highs. The tourists are back in the surf. But the great white risk remains – unseen, restless, circling. And when markets are priced this high, it doesn’t take much blood in the water to start a feeding frenzy. That said, I don’t believe the current market environment warrants panic or extreme defensive measures. There is a way to swim smartly in dangerous, unpredictable waters. There is a four-trait approach to follow to ensure that the water – and your portfolio – stays out of the red. I’ll share that below. But first, let’s take a look at what we covered here at Smart Money last week… | 
0 التعليقات:
إرسال تعليق