Stocks Are 50-60% Overvalued. Could You Survive A Correction That Big? | Lance Roberts

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**Lance Roberts** (0:50)
This is a monthly chart of the S&P going back 25 years.
It is rare that we have been this overbought. So the last 25 years, we've only been as overbought as we are right now, one, two, three, four, five, six times. Each time of those that we've been this overbought has led to a decent correction. This next correction, if it just reverts to its running bullish trend right now, is about a 26, 27 percent correction. If it ultimately reverts to its long-term mean, that's a 60 percent correction. But this is why you have to be very careful with risk assets. In this environment, understanding the volatility risk in your portfolio is not just a function of narratives and these types of things. It's about survivability. Most investors do not survive 50 percent drawdowns in markets.

**Adam Taggart** (1:46)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you back at the end of the week for another weekly market recap. In fact, a special holiday Christmas weekly market recap with my good friend, the Prudent Protector portfolio manager, Lance Roberts. How are you, Lance?

**Lance Roberts** (2:05)
I'm doing good. It's, you see, I've got my Christmas background going.

**Adam Taggart** (2:09)
Very Christmassy, yeah?

**Lance Roberts** (2:10)
That time of the year. So yeah, I love this time of year.

**Adam Taggart** (2:13)
You're having a blue Christmas, it looks like, with your shirt and your blue background?

**Lance Roberts** (2:17)
Well, actually, I tried red earlier, but it was a little bit too bright, so I had to tone it down a little bit, so I had to use blue. But that one was actually had a Christmas tree and a bunch of other stuff. It was awesome, but it was just way too bright.

**Adam Taggart** (2:30)
Nothing wrong with channeling the king, channeling Elvis on the holidays. Exactly.

**Lance Roberts** (2:38)
By the way, we have to start out this whole conversation this morning, with the fact that I've been working on something for 18 years. 18 years. I talked about this on my radio show on Friday.

**Adam Taggart** (2:51)
Yeah.

**Lance Roberts** (2:51)
Sorry, on Thursday.

**Adam Taggart** (2:52)
What is this? Getting into your wife's good graces? What is it?

**Lance Roberts** (2:56)
Pretty close. Actually, no, that's actually not what happened.

**Adam Taggart** (3:01)
It's still a work in progress?

**Lance Roberts** (3:03)
It is always the case. But for 18 years now, she and I have had an ongoing argument. And that argument is whether or not Die Hard is a Christmas movie.

**Adam Taggart** (3:15)
Oh.

**Lance Roberts** (3:16)
And I now have definitive proof that it is because just yesterday, Charter came out with this survey, Die Hard, number five on America's favorite Christmas movies.
So my wife was traveling. She was in Indiana yesterday working on a contract. And so I texted her. This was about 6 o'clock in the morning. This was about 5 o'clock, her time. So I text her with this chart. And it says, ha, I win this argument. No debate.

**Adam Taggart** (3:46)
It's over with.

**Lance Roberts** (3:47)
And she goes, that's not even really a survey.

**Adam Taggart** (3:53)
Oh, man, that's great. Well, look, you caught me in the camp that Die Hard is indeed a Christmas movie. I'm going to share something since you brought that up. Let's see. This is on X here. So let me see if I can pull this up. So I shared one of my favorite Christmas ornaments on X, and I don't know if folks can see this well. This is a jar of marshmallow fluff. And I think knowledge of fluff may be fairly regional. But fluff is a marshmallow spread that you spread on a slice of bread. It'll give you instant diabetes. But where I grew up, you would make fluffernutters. So you'd take marshmallow fluff, you'd slather on one side of the bread, you'd put your jiff or skippy on the other, you'd slap them together, and you'd have a fluffernutter. They make fluff.