Over the past decade, I've always been of the mindset that any pullback in the market would be temporary and in hindsight would be merely seen as excellent opportunities to buy the dip. For the most part that has worked out great. Unfortunately this current market feels different.
Nothing earthshattering here, but these are the issues that really worry me:
- Inflation / supply chain issues / Oil. I was of the mindset that as covid restrictions were eased, supply chain issues would ease as well and the world economy would be unharnessed and supply chain issues would resolve. Unfortunately that has not happened. Particularly with oil, which is so interconnected across many industries. There aren't any convincing signs that tell me inflation and supply issues will subside any time soon. I would personally love to see the whitehouse incentivize american oil producers to ramp up oil production. It's almost a patriotic duty. We're sitting on massive amounts of oil, but american oil producers will not produce any more oil to help bring in more supply. Unfortunately I do not see any relief in sight on any of these issues.
- War in Ukraine. At first I though the market tanking toward the beginning of the Ukraine invasion was an excellent buying opportunity, as the sanctions on Russia don't seem like they'll have a noticeable impact on most company's earnings (bought a bunch of GOOG and MSFT). Unfortunately the constant fear of world war 3 is going to put a ceiling on this market. Russia thought they'd just blow through Ukraine and call it good, but the Ukrainian heroics have forced Russia to shift to the long game. This war could drag out for months if not years, especially since even if Russia eventually takes over the whole country, I imagine there will be constant insurgency and continued fighting. Don't see an end to this any time in the near future.
- Fed rate hikes. With inflation running wild and showing no signs of alleviating, the Fed has no choice but to continue to hike rates to try to get things under control. While I'm seeing many people who are much smarter than me saying stagflation is not a legitimate risk for the country at this time, rate hikes certainly won't help with any growth.
Not only do we currently have these major issues, but I don't see how any of them could be resolved in the near future. I'm keeping my weekly dollar cost averaging going in my Vanguard account (I will never stop this), but I'm not planning on buying any individual stocks for the time being. I'm more pessimistic than I've been for a long time.
Thoughts? Am I way off on anything / everything? I don't claim to be the knower of all things, so I'd love to hear other perspectives
Edit: For clarity, I'm not selling anything. I've got gotten too pessimistic to buy this dip. If it drops another 10% or so I'll reconsider again. Also, I won't just build up a big cash reserve that will waste away with inflation. I'm planning on putting my flow of excess cash in my Nexo account where I get 8% interest for holding stablecoin.
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