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Market indicator hits extreme levels last seen before plunges in 1929, 2000 and 2008
The key is to use other tactical variables in determining precise asset allocation. Valuation metrics can be overbought for long stretches of time and and one has yet to develop accurate allocation strategy around them that produces alpha over buy and hold. Relying on this type of information steers many an investor astray.
A well designed, rules based, tactical strategy * based on signaling variables that have produced repeated and consistent positive outcomes over a long sample, combined with CAPM / factor equity asset universe selection, has no "opinion" and derives no decision process based on valuation measures and valuation anecdote.
The key is to use other tactical variables in determining precise asset allocation. Valuation metrics can be overbought for long stretches of time and and one has yet to develop accurate allocation strategy around them that produces alpha over buy and hold. Relying on this type of information steers many an investor astray.
A well designed, rules based, tactical strategy * based on signaling variables that have produced repeated and consistent positive outcomes over a long sample, combined with CAPM / factor equity asset universe selection, has no "opinion" and derives no decision process based on valuation measures and valuation anecdote.
From the original post's link. Even based on the more common price-earnings ratio, the market looks rich. The S&P 500's P/E based on earnings of the last 12 months is 18.9, the highest in more than 12 years, according to FactSet.
Keep in mind that inflation is still very low, and that can support a higher P/E ratio. Just because equity markets are hitting a new high, doesn't mean that we are due for a crash. I'm not terribly concerned about a correction, which I would view as a buying opportunity.
Anyone have a link to projected earnings? That is part of the equation. I'd like to take a look. But those projections have to be tempered by the fact that they are typically short term, and analysts have a ton of conflicts of interest. Not to mention that they are highly overpaid and terribly underskilled.
+1 now about 15% in cash. Probably good we are all worried though as markets seldom accommodate the worriers. I don't recall many worriers at the tops in 2000 and 2007. Still, will continue to raise cash if necessary. Yesterday's 300+ move in the Dow didn't have the usual up/down volume as many in the past.
@Junkster Did you trim your bank loan position? It seems to me it should be safe during a correction caused by stock overvaluation. SAMBX is up 0.11% today when everything is down.
@Junkster Did you trim your bank loan position? It seems to me it should be safe during a correction caused by stock overvaluation. SAMBX is up 0.11% today when everything is down.
On the Feb 23 posted I was 100% junk corporates. Bank loans have been a bit staid this year compared to the corporates returning 50% less YTD. But if stocks correct most likely so will junk corporates. I didn't like yesterday's rally. The bank loans have been really steady and still look good especially if short term rates keeps nudging up. I may get back in that sector.
Comments
now at 29.53
I do, and am selling some things.
No links, though.
Relying on this type of information steers many an investor astray.
A well designed, rules based, tactical strategy * based on signaling variables that have produced repeated and consistent positive outcomes over a long sample, combined with CAPM / factor equity asset universe selection, has no "opinion" and derives no decision process based on valuation measures and valuation anecdote.
* http://tinyurl.com/znnqxdw
There is a lot there. If you can make anything of it.
http://ciovaccocapital.com/wordpress/index.php/stock-market-us/rare-signal-says-stock-rally-is-the-real-deal/