People are in panic mode, wondering if judgment day has finally arrived… the day that the stock market finally turns bearish.
Many “experts” are giving their opinion that the market will fall into a downward spiral the next month or year, reaching all-time lows.
As I always say in situations like this… calm down and think this through.
As the chart shows above, the stock market is far from a downward spiral. Even considering today’s 3% loss, it is still slightly above its long-term median valuation and is trading at about the same P/E the past year.
I always advocate buying when the market is trading below its median P/E, and selling when it rises above. Time and time again this strategy has proved profitable in both bull and bear markets.
We cannot predict short-term movements, but we can trade rationally…which is much more than the average investor does.