Indeed. I think that is the problem with vic_wattles traffic lights.
For example, in the first post of this thread (22/4/2022) they were all green.
If you had have invested in US stocks then, you would be down -10%, or -16%, if you ignore the relief rally over the last few days.
I suppose that is better than -50%. However, we really don't know how much further stocks have to fall. Still could end up being -50%.
Therefore, if you want some traffic lights for Wall St, I will give you a couple.
1- Margin Loans. If you buy something that other people have bought with a loan, then you will always pay a premium. Better to wait until their high-risk bets don't work out and they become forced sellers. You might have to exercise patience, which they can't, but the reward is picking their stock up in the liquidation sale.
2- Shiller PE. Also known as the 10 Year Price to Earnings Ratio. If you are buying when it is 20+, then you are asking for trouble. 30+ is pretty much a guaranteed loss over the long term. Think about it. Why should I pay $30 for $1 of earnings, when other people at differing times over the last 100 years where only paying $10? Once again, a little bit of patience is needed. 3-Dow to Gold Ratio. How can someone really tell if US stocks are cheap, if they only ever price them in US dollars, and just compare them to other stocks? They are losing sight of the bigger picture. What is funny, is that gold is very expensive relative to silver and platinum, but very cheap relative to US stocks. In other US stocks are likely to be expensive.
IMO, even if someone had only those three charts, they would be able to avoid buying stocks at the top. They all work together to help give an idea of the bigger picture. Of course, the more information you can get the better. Also, no one can know when the bottom of the market is, so to speak. However, I would rather buy stocks after they had already dropped 40%, because at least some of the risk would be off table.
Then, you will have people telling you about the 'opportunity cost' of not in investing. For example, if you do a google search seeking investing 'advice', pretty much every site will tell you not to keep your money in cash. However, that is just the financial industry and heavily invested individuals trying to keep the ponzi going. Imagine the carnage if everyone decided that stocks, property, bonds etc. were crap and tried to 'cash out'.
Anyway, no stocks for me yet. So, you can consider my Wall St traffic light to currently be RED.
