We are approaching something we haven't experienced since 1929. The "Buy and Hold" mantra only works in a disinflationary environment but what lies ahead requires another approach as we are just entering P/E ratios contractions because of higher rates.
Earnings: The value of stocks is still greater than 4 years ago even after this minor correction of 20% we've experienced. The stock market is still expensive and is about to get more expensive when we see earnings announcements that don't meet expectations.
Debt: Then we add in the fact that the USA Debt to GDP has risen from an already historical blow away high number of 775% to 810% today. (NOTE: In 1989 it was 39%, yes only double digit).
US Household Debt in 2018 was $15.6 Trillion Today is at $18.6 Trillion
US Corporate Debt to GDP was 45% in 2018 Today it is over 50%. (NOTE: In 2000 and 2008, this number "topped out" at 45%. These >50% numbers are unheard of.
There is much more going on. >escalation of war >high inflation >rising rates >Credit Suisse nearing bankruptcy >record high credit card debt >real estate prices starting to drop >consumer spending down as retailers suffer >Bank of England bailing out pension plans and at crisis levels economically >Europe in complete disarray with fuel shortages to top it off
The global markets have never been so fragile. Will the upcoming earnings be the catalyst to bring about market capitulation or will it be the default of the Bank of England?
Cash is king as we watch how this all unfolds.