Stock Market Crash

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Stock Market Crash

Will The Stock Market Crash Or Not?

Many big-name investors, including Michael Burry, think the next US stock market crash is very close now. They might be right or they might not. After all, it's been years since we've heard about a stock market crash, and it hasn't happened yet.

It was almost a year ago when The Guardian talked about how AI is a bubble, and it will cause the market to crash. Since then, the S&P 500 has gained 22.4%, and the FTSE 100 is up by 21.3%.

Stock Valuations Are At Record Highs

But there is no doubt that the valuations of stocks are very high. However, even that hasn't stopped the share prices from going higher. And there is no rule that says the market should crash when valuations get high.

The lesson here is not that valuations are irrelevant or the investors predicting the crash are unintelligent. It's just that timing the stock market crash is very difficult.

So, what's the play? Smart investors shouldn't focus on the valuations or the stock prices. Instead, they should look at the future cash flows and how they look relative to the recent share prices. There's no point in trying to time the next stock market crash.

The best strategy to navigate through such tough times is to look for momentum. Another thing to do is hope that the winning stocks just keep winning.

Also, long-term investors shouldn't worry too much about a stock market crash. History tells us that the markets always recover and even reach new highs after a crash. So, if you have the stomach to hold stocks for several years, you shouldn't worry too much about a crash.

The only thing you should do is to pick solid stocks with enough cash flow and a robust business. This way, you don't have to worry about how the market behaves in the short to medium term.

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