Investors are getting nervous about U.S. stocks as the coronavirus recession lingers.
Even some notable bulls are suggesting you should get out of U.S. stocks.
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I came across a survey this weekend from SimplyWise. The research company conducted a survey of Americans that found 72% of U.S. adults believe this recession will continue into next year.
Now, recessions and stock market crashes don’t always go hand-in-hand. The U.S. stock market isn’t the economy and the economy isn’t the U.S. stock market.
Just look at the stock market’s recovery after the Great Recession. Stocks rebounded well before the recession was “officially” over.
This time around could be a bit different.
Confidence is often driven by perception. If things look OK, investors will often assume things are OK.
Well, things aren’t looking so OK at the moment.
More than half of states are pausing their re-openings as COVID-19 cases spike again. Some, like California and Texas, are actually closing down again.
That is rattling nerves, stopping last week’s stock rally in its tracks.
That’s making some notable bulls nervous.
Long-time veteran market bull Ed Yardeni is worried.
Yardeni spent decades running investment strategies for some of best-known banks on Wall Street. He’s also head of Yardeni Research.
Yardeni warns that the stock market has been “melting up.”
He believes U.S. stocks have become overvalued because of support from the Federal Reserve, but he doesn’t ever fight the Fed.
That said, he’s afraid now that states are beginning to close again, the Fed won’t be able to provide enough support to sustain the rally.
He’s advising folks to start investing in regions with fewer cases of COVID-19. He particularly likes China, Japan and Europe, where new cases are slowing down.
He also says those markets are much cheaper on a price-to-earnings basis, so much better values. That basically means you get more bang for your buck.
When Ed Yardeni says to avoid U.S. stocks, a lot of investors listen.
That means we might see another meltdown instead of a melt-up.
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