Upside Risks
- Corporate buyback rally continues until corporations are broke which then turns into a downside risk.
Downside Risks
- Market takes back gains from 122 days of tweets about how close & great the trade deal was going to be now that the trade deal is dead and the trade war commences in earnest – medium risk
- Market prices in negative earnings reports for 2019 – low risk
- Market wakes up and realizes its valued at twice its normal price-to-revenue ratio – very low risk
- Investors realize reported Price-to-Earnings ratios don’t include companies with negative earnings… and over 30% of the Russell 2000 index has negative earnings – only TSP Smart investors
- Investors learn Fedspeak and realize talk of not hitting arbitrary 2% consumer inflation target is code for the financial markets are in distress and they may need more bailouts soon – actually this should be an upside risk for the markets
For those wondering why I refer to Neverland in my writing or why I titled my last post TSP Funds & Reaching Neverland, it comes from the following quote by the President of the Bank of Japan talking about monetary policy.
“I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘The moment you doubt whether you can fly, you cease forever to be able to do it,'” Mr. Kuroda said. “Yes, what we need is a positive attitude and conviction.”
Wall Street Journal article Bank of Japan’s Kuroda Channels Peter Pan’s Happy Thoughts.
Today the stock market is flying in Neverland with conviction in peter pan central bankers and one day will have to return home otherwise free markets will cease to exist in America very soon.
Which is a different kind of risk.
Invest safe… invest informed,
Michael Bond
TSP & Vanguard Smart Investor serving serious and reluctant investors
Best TSP Funds and Allocations is a good starting place