Not all good things need to come to an end, but it’s likely the bull market will end badly. I’m doing what I can now to protect my retirement accounts so that my balance doesn’t flirt with double digit percentage losses as it did during the Great Recession. According to a recent Daily Ticker piece, economic Robert Shiller is worried about stocks. His outlook is based on a cyclically adjusted price-to-earning ratio (CAPE) that is well above average and approaching peak levels that often occur before a significant drop. I’m being proactive instead of gambling with my retirement.
Investing in dividend funds
Instead of buying individual stocks that could go bankrupt in another recession, I’m buying shares of exchange-traded funds that pay dividends. Since I purchase just a few shares each month, I’m buying at different prices points. Some months the shares are more expensive and some months they are a bargain. On top of that, I get paid a dividend or company profit that I can use to purchase fractional shares or keep as cash in my money market fund within my IRA.
Focusing on pharmaceuticals
Although any stock can go up or down, I am more confident that my pharmaceutical stocks will perform better over the long run. I’m doing research to make sure I choose the best stocks and funds. Since people need medication, I don’t think the industry will be hurt by another recession. Because I’m not an expert on stock market investing, I seek out professional advice before making any trades on my own.
Staying invested as long as possible
According to another Daily Ticker piece, some experts believe the bull market will end badly but the rally may continue for another year or two. I’m only now starting to see my account balances get back to even after the last stock market crash. Some fund managers expect the market to go down after the S&P 500 hits 2250. I can understand why some people expect the stock market bubble to burst around the time of the next presidential election.
As a member of Generation X who will retire in another 20 years or so, I can’t afford to miss out on the stock market gains that come with bull markets. At the same time, I need to be defensively positioned when the bust occurs. By sticking with dividend-paying funds and recession-proof industries, I hope to still benefit from stocks up until the last minute.
More from this contributor:
I Stopped Trading Stocks
I Should Have Saved Cash
How I Recovered After Losing $100,000