US stock market seems to rise so well, such that people start to forget how it feels when it crashed last year.
Are we going to ride like this forever? The answer definitely is No. sp500 now sits on a dividend rate 1.3%, lower than dot.com bubble peak, the price level certainly is not sustainable.
When is it going to be corrected? Nobody knows. There has to be an event, a catalyst to trigger it. And seems there is no such an event in near time. But nobody can predict future.
How should we prepare for it? It is a hard time question, I tried to use out option, but since it has a time on expiration, I have been losing the whole value of options. So I am thinking of a different approach this time. Since I gauge the stock market is too high, I have been investing more on Muni, utility and infrastructure closed end fund to boost monthly income and they play well with the anticipated tax increase and infrastructure bill. And when market goes south, I predict they would be going down but not the same scale of the whole market. And I will find some level when it is a good time to reallocate some of it back to the market.
我们如何准备呢? 这是一个困难的问题。我曾经用put option, 但是它有个过期期限，所以我总是丢掉整个投资的钱。这次我准备用一个不同的方式。因为我觉得股市太高，我最近都是在投资muni, 基建等的closed end fund, 一方面他们提供每个月的现金，一方面股市下跌的时候，我估计他们不会跌得比股市厉害，到时候把一部分投资重新分配到股市。