“I’m starting to feel like I really missed out on the stock market,” my friend Sean told me yesterday.
Sean’s a smart guy. He’s rational. He was worried about the economy, and he didn’t really buy stocks. He thought he was doing the right thing. But now he’s not so sure.
Stocks have nearly tripled in value since bottoming out in March 2009. And home prices have jumped, too… They’re up over 40% since early 2012 in cities like Phoenix and Las Vegas… and up 21% nationwide.[ad#Google Adsense 336×280-IA]Sean is feeling left behind.
What should he do?
Are you feeling like Sean, too?
Are you making money?
Or have you been missing out while your friends have been making money?
What should you do? I will tell you what I think today…
I definitely know that feeling of “missing out.”
I have had it to an extreme twice in my life. Friends around me were getting rich. But I wasn’t. I admit, I was jealous of “the Joneses.”
Let me explain…
The first time I had this feeling was back in the late 1990s. My wife and I (with a Master’s Degree and PhD between us) were making less than $100,000 combined. I realize that’s not exactly living at the poverty line. But many of my friends were getting rich in the dot-com era…
My friends were signing on with dot-com companies and immediately becoming millionaires on paper (through stock options). Other friends were getting rich trading the Internet stocks themselves. I was the foolish one who didn’t join in either.
I tried to tell myself I was happy for their success… that I really did want the best for them.
In reality, I WAS jealous. I thought about joining the dot-com world… But the dot-com world didn’t make any financial sense to me.
Most of my friends that became dot-com millionaires ended up losing all of their paper wealth. They didn’t believe the good times would end. They didn’t plan for protecting what they had.
They confused dollars with sense. And they lost it all.
Fast-forward to 2007… Once again, many friends around me were once again getting rich… This time in real estate.
One part of me was happy for their success… but another part was jealous. I was just as smart and had worked just as hard… So why were they making so much money while I was not?
I considered joining them… but it didn’t make financial sense to me… Property prices can’t go up 20% a year forever when the population only grows 1% a year.
You had to see a bust coming… And it did. A couple of friends managed to get out with some of their net worth before the market crashed. Most of them did not.
Fast-forward to today…
People are once again getting rich as asset prices have risen substantially. You might be missing out like my friend Sean. What should you do?
Many smart folks like Sean are likely thinking “Those fools… they think they’re getting rich now… but when The Bust comes, they’ll be sorry!”
I don’t think that’s the right thinking today…
We DO know that stock prices and house prices can’t go up forever. However, I think there’s a lot more upside potential in this market.
I believe we’re in about the seventh inning of this game… of what could turn out to be the mother of all investment bubbles… where stock prices and real estate prices soar higher than anyone can imagine.
I think this time around could even turn out to be bigger than the dot-com bubble – because it will be broader – it won’t just be tech stocks this time.
My basic script has been that the U.S. Federal Reserve will keep interest rates lower than anyone can imagine for longer than anyone can imagine… And this will drive asset prices to higher highs than anyone can imagine.
Can the game keep going?
In a word… YES.
The Federal Reserve has promised to keep interest rates low even after the economy shows signs of recovering. This promise is what will cause asset prices to continue to soar to much higher highs.
Yes, I recognize that U.S. asset prices are starting to get “up there.” They’re no longer cheap. But they’re not expensive yet, either.
Again, I think we’re around the seventh inning of this game… More important, you need to know that the biggest gains will likely come in the final innings. You do not want to miss those gains!
Yes, stocks are up. But no, you haven’t missed it. Now is not a time to be jealous of the Joneses. Now is a time to join them… as I believe there are more gains to come…
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