RE:High oil and gold precede recessions Jay...can't argue with what you are saying
Here are some of my thoughts...
1.....basically since the beginning of the year, the market sentiment has been in the Greed or Excessive Greed category with the occasionally short-lived neutral or fear. In general terms this is a strong indicator that valuations are too high and for investors to be careful. Those that have ignored this so far have done well and in a sense this has fuelled the continuing greed. Historically, we are at the outer bands and the market pros will be looking for an excuse to take the market down and reload.
2....The US market is doing well but IMO this is due primarily to unprecedented stimulus approved by the US Congress. The US Government is spending about 50% more than it is bringing in from tax revenues and according to the CBO this will get even worse over the next 10 years (they only forecast out 10 years). Already we are seeing pressures to spend even more money without tax increases. In Canada, we are seeing similar things although not to the same extent. Trudeau's latest budget is IMO a piece of fiction in terms of increased taxes on the rich and savings from cutting 5000 positions (not people) to pay for billions in new programs to help get re-elected. He has already doubled the national debt since he was first elected. So what we have is a conflict between monetary policy and fiscal policy. If history is a guide, monetary policy will win and by that I mean continued higher interest rates which will ultimately bring the market down. The only real question in mind is when that will happen. Again, history has shown that the longer it takes for that to happen, the bigger the correction in the markets. The Granddaddy of them all of course is 1929.
3...most of the Government spending and even more worriesome is the increased regulation which has presented a trend towards Marxism and Government control over everything. Marxism is a killer of productivity (some people here are already talking about low productivity), without productivity gains, the standard of living stagnates or worse yet declines. None of this is good for the market. In terms of regulations, a great example and subject of much discussion here is the legislation regarding sales of EVs.
So where does all this lead in terms of investment decisions?
Well as I have said many times....that depends on your financial objectives and tolerance to risk. That said, whatever that works out for each of you, the considerations that I outlined above serve as an overlay to that strategy and if you don't factor that in you may wish at some point that you did.