Is this stock market overvalued? Are there any indicators? If you can’t trust the stock market, where should you put your money?
- Some experts think stocks are overvalued
- Alternative investments are more popular than ever
- Real estate and cryptocurrency lead the way
Stock Market Valuations
According to CNBC and David Tepper, the current stock market is overvalued. What this boils down to is that the current price of the stock is not justified by its estimated value according to its earning outlook. Stocks that are overvalued have the potential to cause market volatility as prices can adjust, rise or lower.
Investors are showing hope about the eventual reopening of the economy. Earnings are down for many companies because of the coronavirus crisis. Potential rebounding may take a long time as the country, and the world, establish a “new normal.”
Beyond traditional investments, like stocks, there is the opportunity to invest in alternative assets. With the stock market overvalued, there’s more reason than ever to explore these opportunities.
Real Estate is a great alternative asset if investors are in it for the long haul. It can take a long time to enact a transaction, there can be a bit of back-and-forth, and upkeep may be required for the property involved. But it can also be a great investment, particularly if using a checkbook IRA, also known as a Self-Directed IRA LLC, as decisions can be made quickly and handled with rapidity.
Some opportunities in real estate include:
- Residential homes – for sale and flip
- Vacation homes for rental
- Raw land
- Joint venture investments involving commercial properties
- Mortgage notes
Cryptocurrency is not subject to an overvalued stock market, as it exists outside market influencers. Bitcoin was the first crypto created, and may still be the best known. The cryptocurrency market has, however, been very volatile since its inception. The price of Bitcoin can swing up or down hundreds of dollars in a day; cryptocurrency is, despite all its risks, perhaps the most exciting asset of the 21st century. A decentralized digital currency that works on the very interesting and likely here-to-stay blockchain technology.
Cryptocurrency can be held by a retirement account because the IRS treats it as “property” and not as actual currency. A Self-Directed IRA is permitted to hold Bitcoin and other cryptocurrencies.
Stock Market Valuation, Alternatives, The Future
2020 has been an interesting year, and it’s not even half over. There were wildfires in Australia, the helicopter crash that claimed the lives of Kobe Bryant and eight others, Prince Harry and Meghan Markle stepped down from being senior royals, there was an impeachment trial, and of course, COVID-19 or the coronavirus crisis.
While no one can predict the future, it can be an advantage to have assets in multiple areas, so that your wealth and financial future are not necessarily directly tied to any one area of investment. Diversifying your portfolio, keeping your wits about you, and looking ahead to better times can help ease the current stressful situation.