How much overwhelms US stock: the structure of your portfolio, tips and recommendations

In this article, I would like to evaluate how much «overheated» shares are now?

An study of this issue in early 2021, a division of Morgan Stanley E-Trade Financial, which conducted a survey of its customers. According to the results obtained, more than 16% of large contributors noted the overheating of assets. And then they continued to rise in price without any reason.

Current situation

Speaking about the current situation, the overheated in the US stock market confirm several indicators at once:

· Buffett indicator. Shows the ratio of capitalization of US enterprises to the country’s GDP. The value of the parameter exceeds 160%, similar movements occurred only in 2001. For comparison — in Russia, the indicator does not rise above 50%.

· Multiplier price / profit (P / E), through which the stock markets usually assess. Today it is equal to 22 annual profits, which also brings the stock market for the times of 2001.

As the Swiss bank Berenberg noted (founded in 1590), investment markets overbought.

Bank analysts recommend in the current situation to reduce the share of bonds in the portfolio, as well as correct its structure.

· 40% in promotions;

· 10% in bonds;

· 20% in gold and bitcoins;


Additional tips:

Fixing profits. It is recommended to do this if there are positions that have already shown positive results, but there are no more confidence.

Saving unforeseen expenses. It is advisable to prepare cash in advance for paying taxes, buying property, etc.

Care from marginal trading. Do not take money to debt at the broker, even if it seems that the use of the loan shoulder can increase profits.

It is also recommended to draw up a list of those desired to acquire shares, which can be purchased at a bargain price in the event of the market collapse.

I also want to pay attention to the fact that the current overheated market does not mean that he will not be able to continue to grow. When the actual turn occurs, no one knows.

Therefore, adhere to your strategy, a trading plan and on a long distance we will still be with you in a plus, we act competently and without emotions. If you want to work your personal strategy and financial plan with my team, then