#macro view

https://img.etimg.com/thumb/msid-124184503,width-1200,height-630,imgsize-88774,overlay-etmarkets/articleshow.jpg Read the headline, it says Part 2 (A). Why this subpart? When we decided to look at inflation, we assumed that we would be able to explain it in one article. But it is too big and complex a subject. The word “inflation” might appear the same in the US, India, or for any emerging or…

Here’s an overview of what we’ll cover:

Get a Macro View of Where You Are

Determine Your Why

Decide How Hands-on You Want to Be

Assess Your Risk Tolerance

Determine How Much You Want to Invest

Decide Which Types of Real Estate Investments to Pursue

Recap and Takeaway

Step 1: Get a Macro View of Where You Are

Here’s an overview of what we’ll cover:

Get a Macro View of Where You Are

Determine Your Why

Decide How Hands-on You Want to Be

Assess Your Risk Tolerance

Determine How Much You Want to Invest

Decide Which Types of Real Estate Investments to Pursue

Step 1: Get a Macro View of Where You Are

First things first. Before you decide on where to plunk your money down, you need to take a step back to assess where you are in life and your financial journey, and what you hope to achieve through investing in real estate.

“Many market participants are saying that stocks are the only game in town, and the market will continue to appreciate no matter what, etc. 

Stocks are far from cheap right now. In fact, most are outright expensive. 

The SPX is trading at a P/E ratio of around 37 right now, vs. only 23 a year ago. 

That's about a 60% premium to last year's prices.

Does this make sense? 

We did not have the coronavirus and all the mayhem along with it a year ago, no we do, and stocks are 60% more expensive. Why? Oh right, it is the forward earnings that count... Well, the forward P/E estimate based on consensus forecasts for the SPX is around 26, and roughly 31 for the Nasdaq.

Does this seem cheap? Not to me. Perhaps a better question is will most companies actually hit their projected EPS targets with all the issues in the economic pipeline? 

My estimate is no, most corporations will not reach consensus estimates (in 2021) due to the perpetual spread of the coronavirus, a divided government, extremely high unemployment, worse than anticipated consumer spending and other factors.

...

The S&P 500 has corrected by 10% thus far. Unfortunately, due to numerous negative fundamental developments as well as a deteriorating technical image, there is likely more downside ahead for the SPX and for stocks in general in my view. 

A key level to watch right now is 3,200, and if it fails, down to 3,000, the S&P 500 will go in my view. Furthermore, in a worst-case scenario, SPX could go down to 2,750 or lower even if the economic image continues to deteriorate in the U.S. and around the world.