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Warren Buffett’s favorite market metric suggests investors are ‘playing with fire’

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By Shawn Langlois
Published: Oct 31, 2017 1:35 p.m. ETSHARE101‘If you stick your head in the sand and pretend that this isn’t anything to be concerned about, you aren’t going to like what comes next.’ReutersWarren Buffett participates in the newspaper tossing challenge.Warren Buffett once described his favorite market indicator as “the best single measure of where valuations stand at any given moment” and that when the metric exceeds certain levels, like it did back in 2000, “you are playing with fire.”If that’s the case, investors might want to blow out that candle.Put simply, the Buffett indicator is the total market capitalization of all U.S. stocks relative to the country’s gross domestic product. When it’s in the 70% to 80% range, it’s go time. When it moves well above 100%, it’s time to tap the brakes.The metric sits at almost 139% at the moment, which is getting awfully close to the record 145% it hit during the peak of the dot-com bubble in 2000, the only other time the number …

Three money managers who lived through the 1987 stock-market crash warn of danger today

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By Philip van Doorn
Published: Oct 31, 2017 1:49 p.m. ETSHARE‘I would take some money off now because ... there are clear signs of deranged valuations,’ says Gabelli fund manager Lawrence HavertyGetty ImagesA trader on the New York Stock Exchange on Oct. 19, 1987 — Black Monday.When the stock market crashed on Oct. 19, 1987, investors panicked. It was an unfamiliar event — the previous decline of a similar magnitude occurred 58 years earlier, in 1929.Now, 30 years after Black Monday in 1987, there are professional investors still at work who lived through that fateful day. In interviews, three of them talked about their experiences, offered insights into warning signs and gave advice on how to handle major downturns.They are:• Lewis Altfest, president of Altfest Personal Wealth Management, which manages about $1.3 billion for private clients. Altfest founded the firm in 1983 after working as a general partner and director of research at Lord, Abbett & Co.• Brian McMahon, chief inve…

7 troubling signs of the stock market

The futility of naysaying the stock market is well-documented over the last several years. Maybe the stock market is “overvalued” according to someone’s pet metric, but a crash never seems to transpire. Maybe political crises create the risk of chaos in Europe or Asia, but the global economy soldiers on without a hitch.

Regardless of investor trepidation, the S&P 500 index SPX, -0.41%   keeps setting new records. In fact, Wall Street has recorded its longest streak of record closes in two decades.So why worry?After all, the economy looks good. Consumer confidence is up against the highest level in 16 years, and the headline unemployment rate is back to pre-recession lows. It’s logical that the stock market would rally strongly on this data.Of course, markets simply don’t go up forever.I’m not saying a crash is around the corner. But as the old saying goes, if you look around the poker table and can’t find the sucker… then it’s you. I’m a firm believer in always knowing the other s…

How to spot an investment scam

Singapore is one of the most important financial centres in the world. A significant percentage of its working population works in banking and finance. At 97%, its literacy ratesare among the highest in the world. Despite these facts, many Singaporeans regularly fall prey to investment scams of various types.A company that offers impossibly high returns often finds many takers. Investment schemes that are blatantly fraudulent attract hundreds, even thousands of people.How can you spot an investment scam? Here is what you should look out for.Is the entity regulated by the Monetary Authority of Singapore?You are unlikely to be cheated by a company that is supervised by Singapore’s regulator and central bank. MAS imposes a strict set of guidelines for the firms that it regulates. Financial companies that are required to adhere to the rules imposed by MAS must disclose important details about the investment opportunity that they are offering.These firms also need to submit a variety of r…

6 reasons to be cautious about stocks

U.S. equity markets keep reaching all-time highs. Bonds income is low and rising rates will make bonds less attractive in the near term. We are living in historic times: major U.S. stock markets are up over 260 percent since 2009. In the past 50 years, only two rallies were better. But rallies do not just die of old age. Economic data points towards continued expansion, if somewhat tepid, and unemployment is low. Tightening by the U.S. Federal Reserve is likely to be measured and gradual – dovish – as global and U.S. inflation continue on low trajectories.  This has led to complacency among many investors, who generally need exposure to growth stocks in their portfolios to keep up with inflation and meet their investment targets. What can investors near or at retirement do to increase the certainty of meeting their retirement needs? There are six big reasons to be cautious in their approach to investing in equities: Greed & Fear: Many investors tend to overshoot on the upside … an…

Economic downturn

Do you smell a global recession coming?

How to Become a Millionaire by Age 30

Here are the 10 steps that will guarantee you will become a millionaire by 30.

1. Follow the money. In today’s economic environment you cannot save your way to millionaire status. The first step is to focus on increasing your income in increments and repeating that. My income was $3,000 a month and nine years later it was $20,000 a month. Start following the money and it will force you to control revenue and see opportunities.

2. Don’t show off -- show up! I didn’t buy my first luxury watch or car until my businesses and investments were producing multiple secure flows of income. I was still driving a Toyota Camry when I had become a millionaire. Be known for your work ethic, not the trinkets that you buy.

3. Save to invest, don’t save to save. The only reason to save money is to invest it.  Put your saved money into secured, sacred (untouchable) accounts. Never use these accounts for anything, not even an emergency. This will force you to continue to follow step one (increase income)…