The Market Remains Risky

June 2019 Investment Outlook

The U.S. Stock Market remains overvalued. Our opinion has not changed since our last recommendation in December 2018.

In June the Shiller P/E and Crestmont Research is at 30.39 vs. 31.70 reported in March 2019. It is still higher than the 2008 crash P/E ratio of 27.0.

The Treasury Yield Curve is inverted ( 13 Week Treasury Bill at 2.195% vs. 10-year Treasury at 2.054%), which may signal a slowing economy over the next 24 months. The tariffs war against our international trading partners are still unresolved — for example, the recent G-20 meetings in Japan has not impacted the trade war with China. The recent attacks in the Straits of Hormuz have added to the market volatility.

The volatility and our price earning indicators point to an elevated level of risk--combined with the ongoing trade war policy--suggest that volatility may get worse in the next 12 months.

Our investment allocation : (this has not changed since September 2018)

25% cash 50% U.S. Short-term Treasury Bills, and 25% Stocks. We do not see any increase in our stock allocation until we know a pricing earnings ratio reaches 15 to 20 level.

For an investment review, contact me at or call me at 323-913-0738.

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