The word adjustment sounds so tame, but it really means a sharp deep fall in stock prices. A fall that could last for months. The bottom line is the market is going to fall and keep falling and no one knows when it will stop. Your broker is telling you a half truth when he says stocks are the best investment. The whole truth is that over a decade or two they usually come back. If you don't have ten or twenty years get out now. I mean tomorrow. Why? Well the bottom is about to fall out and everything you made is about to go away. They won't tell you this, because they make their money off investing your money and they don't want to lose their jobs and their businesses.
Here's what to expect in the next few months. Banks are going to fall like dominoes and stock prices across the board are going to drop. Why, because there is no money for businesses to borrow to grow and retool. They need to retool, because of the price of energy. They simply have to find cheaper energy and most plants in this country are old and inefficient. No credit leaves them with no options, except to move out of the country or shut down plants. In the short run they will shrink their companies, leaving thousands and thousand unemployed. Their income will go down and their stock will fall. Stocks that are trading in the hundreds now might fall by 50%. That's 50% of the money you have socked away. Once the market falls like this there will be a sellathon.
Just a couple years ago everyone said there was no end to the potential growth of the housing market. Now you know they were wrong. some were more than wrong they were deceiving you. It was a giant pyramid scheme. As long as the money kept being invested, the market would rise, but in a pyramid scheme someone gets left holding the bag. Houses across the country are not worth 50% of their asking prices. In fact it is cheaper to build now than buy these houses from the banks. Why you ask?
The reason is simple the banks have to keep the price higher than than it should be, so it doesn't lose more money. Foreign investors who own a large number of theese houses are keeping the price as high as they can to try to get some of the money back that they invested. The bottom line is that a two hundred thousand dollar house is worth about 100,000 dollars. It might cost a person 100,000 dollars to build that house right now, because the demand for building materials is low and the prices are dropping steadily. Why buy an old house at 200,000 when you can get the same for 100,000. It's not going to happen. The result of this is that the value of all the houses goes down and your stuck with a bad investment.
At some point the foreign investors will cut their losses and sell at fire sale prices. It will happen fast too, because they will want to be the first to sell, because the prices will steadily drop. This will send the economy in to free fall and the holdings a Freddie mac and Fanny mae will drop in value, causing the government to spend up to a trillion dollars to stabilize the market. This is the ten thousand pound gorilla in the room that your broker doesn't want you to see. Most of the wealthy have converted their cash to gold and stable currencies to protect themselves from a drop in the dollar's value. You are the last ones holding the bag get out fast or be a victim like the people who held the bag when the market crashed in the thirties. Don't buy a word anyone says now. Buy gold and platinum and diversify your holdings in other investments, before the market crashes. The earnings numbers will come out and when they do you'll be screwed as companies right off huge losses from energy costs that they have been absorbing for a year now.
The point of getting out now is that when stocks have hit bottom and the smoke has cleared you can invest in the companies that survive and recoup your losses. Fail to do this and you will face financial ruin. This is also the ten thousand pound gorilla in the room no one wants you to see.