Investing in 2019 & 2020
I'm sure to have more posts on this subject since it seems to occupy a bit of my thinking. Where to invest in 2019 and beyond. To get to the punchline quickly I think the overriding strategy is to continue to make regular monthly 401k/payroll investments but if there is additional money you save or come into during this time I think it's better to build a large cash reserve in one of the high interest checking or money market accounts available today. When I say high I mean 2.2 % etc. Then wait until the market provides a better buying opportunity by dropping 20+%.
My thoughts on Equity investing is that it's a necessary evil due to the lack of other liquid alternatives, but should be done in small even increments and not with any large sums of capital until there's a price reset. If you have individual stocks rise above 15% returns then trim the profits and build trading cash balances. Stock prices have been boosted due to a number of factors: Corporate Stock buy-backs, recent tax cuts, M&A action and technology improvements. With investment $$ chasing fewer equity shares you get a natural updraft on share prices. All that said you have to offset those factors with the increase in corporate and bank debt, commercial real-estate overbuilding, and geo-political risks. I think in a 15 year investing horizon there will be some unique buying opportunities, but of course I am only guessing ,but for me it's worth the wait.
Essentially the world we live in means that there are less than half of the publicly traded companies as there used to be. In 2017 there were 3600 which is less than half that we're available in 1997 (bloomberg: https://www.bloomberg.com/opinion/articles/2018-04-09/where-have-all-the-u-s-public-companies-gone ). So I think the over-riding theme is to find profitable companies that have low debt and have a combination of market ownership and investment into R&D.
Of course I think it's worth saying that as individuals and families we have to also be focused on reducing debt and building assets. I also think it's worth finding JOY with your money. This means finding ways to bring joy to yourself and others. That could mean charitable giving, participating in a initiative you feel passionate about. Or it could mean planning a great vacation for your family.