Warning Signs & Speculative Behavior

Greetings from sunny Sarasota, Florida, where the activity level at restaurants and golf courses has returned to pre-pandemic levels, if not even higher.

The stock market has been hitting record highs over the last several months and it's been nice to see the values of your portfolios increasing. But beneath the surface, there are red flags are everywhere.

Here are two areas of concern:

Number one, corporate insiders who usually know the value of their own companies better than anybody, are now selling stock at a record pace.

Number two, speculation in the stocks of new, high-risk companies is rampant and cryptocurrencies are attracting trillions of dollars, much of it from novice investors. This usually ends badly with big losses for speculators.

The drops of the last three days may be the start of more losses to come and we are watching very closely.

We are big admirers of Warren Buffett's investment style. He has a 50-year record of navigating carefully through both ups and downs. Last week at his annual meeting, he disclosed that he is sitting on an unusually large cash position and has less stock investments than usual. We are on the same page in our model portfolios.

We think there is a good chance that more volatility is coming in the markets. This is the time to keep risk levels low, in our opinion. We think that patience will soon be rewarded.

As always, thanks for your confidence in us here at Generations Wealth Planning, and we look forward to talking to you soon.

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