I am interested to learn how you've determined that risk is the highest now since the peak. What do you base this risk assessment upon?
Briefly, the market is now trading at or close to all time highs on: Price to Earnings (PE), Price to Sales, Price to Book and Price to Cash Flow. Moreover, the level of complacency, as measured by (extremely low) VIX levels, is also approaching all-time highs. This has historically signaled market tops, not bottoms and is viewed as a measure of Risk. Low VIX = high risk (if you're long) and High VIX = low risk (if you're long).
Fundamentally, earnings increases are a long way off for most technology companies. Thus, given the historic levels (mentioned above) at which stocks are currently trading, the market has not only priced in a recovery, but it has priced in another bubble (and I don't think that's going to happen again soon). Now if you honestly believe that we will have another bubble ala 1998-2000, then you would be justified in buying the QQQs right now. If however, you believe as I do that market bubbles that pop are rarely immediately reinflated, then you will be patient. It's entirely possible that the market will move up higher before it continues its slide (we are still in a bear market) but I'm not good enough to predict that and, contrary to what others may claim, neither is anyone else.
Regarding your daughter, she is likely young enough that gradually investing a little each month will make her a millionaire by the time she retires. She should be discouraged from attempting to time the market as NO ONE has demonstrated the ability to do that on a consistent basis. The best deal for her is to put the maximum per year into a Roth IRA where she could diversify by buying an index fund that tracks e.g., the S & P (as mentioned, I'd stay away from the Nasdaq for now).
best...
LIG |
