S&P 500: These 2 Number Worry Me More Than High P/E

Envision ResearchInvesting Group LeaderFollow5ShareSavePlay(9min)CommentsSummaryThe S&P 500 faces heightened risk from a historically high FINRA margin balance ratio and the dominance of passive trading strategies.Elevated margin leverage and algorithmic trading create a momentum-driven market, amplifying volatility and the risk of sudden, forced selling.Passive trading now accounts for over 60% of daily volume, with earnings-day price swings exceeding 10% for 37% of companies.I recommend hedging or capitalizing on volatility via diversified asset classes, cash reserves, and a barbell portfolio approach.This idea was discussed in more depth with members of my private investing community, Envision Early Retirement. Learn More » MrIncredible/iStock via Getty Images Elevated FINRA margin ratio met with passive trading With all equity indices (ranging from DJI, SP500, NASDAQ, and RTY) hovering around record levels, I’ve seen plenty of critics about the high P/E ratiosThis article was written byEnvision Research19.92K FollowersFollowEnvision Research, aka Lucas Ma, has over 20+ years of investment experience and holds a Masters with in Quantitative Investment and a PhD in Mechanical Engineering with a focus on renewable energy, both from Stanford University. He also has 30+ years of hands-on experience in high-tech R&D and consulting, housing sector, credit sector, and actual portfolio management.He leads the investing group Envision Early Retirement along with Sensor Unlimited where they offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request.Analyst’s Disclosure: I/we have a beneficial long position in the shares of ALL TICKERS IN THE SWP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.