Is the Stock Market Cheap?

Old_Skeet

Is the Stock Market Cheap?

I did a little buying Thursday in a rounding out process in a couple of my equity fund holdings. Nothing major and I have some more buying to do in this area in my rounding out process.

In doing so I had to wrestle with the thought … Is the Stock Market Cheap?

I have provided a link that perhaps addresses this question. It seems that now the fed has telegraphed that it is going to “possible” begin to reduce liquidity in the near term the stock market which has been bid up from the feds liquidity will now have to find a footing based upon its members ability to generate revenue and earnings capacity going forward.

http://advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php

I wish all … “Good Investing.”

Skeeter

JohnChisum

You might get many different answers depending on one's perspective. The market is cheaper than it was a month ago. It is cheap if you bought additional shares at lesser prices than before.

This Fed speak and the financial media interpretation makes for some fascinating conversation. I think we all knew that sooner or later the Fed was going to take away the punchbowl. Yet everyone is excited and nervous now that the Fed is gesturing the same. For about two years now we have been talking about the end of the bull market in bonds. It finally arrived so we should not be shocked yet the media is pushing the buttons. Maybe investors were waiting for that exact time and date when everything changed? I don't know, but the reaction worldwide is showing that everyone is headed for the exits.

Emerging markets, real estate, and some other sectors are cheaper now. As long as your asset allocation is kept intact then additional buying should be a no brainer. I'm not a fan of The Buffet per se but he did make that famous quote regarding buying when others are fearful.

Great topic for the weekend Skeeter. All the best.

Charles

Nice Skeeter. Excellent presentation by Doug Short. Some good stuff on the AdvisorPerspective site, but honestly hate the bombardment of ads. In comparison, we are so spoiled with MFO!

I certainly don't think the market is over valued versus historical standards and given improving economic conditions. But when the market speaks, I've learned to listen. Let's hope bears have it wrong and we will see continuation of increasing returns in coming weeks and months. Thanks man!

Old_Skeet

I also put this up under Max's post ... Don't Worry Be Happy ... concerning the landscape in the capital markets. I believe this has some revelance on the subject of falling market prices but with the fixed income side of things.

My short term bond funds are showing nav stress. But, since the duration is short and if the funds can hold their bonds to maturity then they will return full principal. So if investors keep their head and the funds don't have a cash-out run on them then they should do just fine as the securities they hold should mature at full value with no loss of principal even though the fund's nav has perhaps declined as this is computed based upon the value of the securities held on a day-to-day basis. And, those funds that are holding a good amount of cash can perhaps profit by buying additional securities at now discounted prices and holding them to maturity.

So, sometimes, those with the cooler thinking heads can profit. We will see if the old Timex commercial is fitting here ... It can, "Take a Lick and Keep on Ticking!"

Anyway, this is my thinking ... and, I am holding on to my short term fixed income funds along with my multi sector income funds that also hold some equities and convertibles. The funds that I hold in the income sleeve of my portfolio are as follows: LALDX, THIFX, ITAAX, LBNDX and NEFZX. I am thinking of adding TSIAX or EVBAX in the nearterm after the dust settles and things settle down. The funds that I hold in my hybrid income sleeve are as follows: CAPAX, FKINX, ISFAX, PASAX, PGBAX, AZNAX and NWQAX. I know, one of these is gotta go when I add to the other fund in the income sleeve to keep the total at a dozen funds within my income area. Right now from both a fund count and dollar amount I am overweight hybrid income.

Seems the 4th is fast approaching and uncle Ben started the fireworks eary this year.

I wish all ... "Good Investing."

Skeeter

scott

I've been buying this week. I'll look to add again if there's another substantial (7-10%) leg down.

MikeM

Sure stocks are cheaper but this was kind of anticipated, wasn't it? A few of us have pulled back a lot or a little to cash. Skeeter, you yourself were looking at the S&P500 going to 1575 before you started buying. That would be about a 9-10% drop from it's high. I think the S&P has only dropped ~ 5.6% (?) at this point. Not sure that is even classified as a correction.

I'm always been terrible at timing, but I feel no need to buy right now. I've tried to catch falling knives before. I think - guess - ponder, that things will continue to correct 10-15%. But if not, I'll deny I said that

Old_Skeet

Hi Mike,

I hope things are unfolding to your liking. My comment on buying was that I'd doing a little buying around the S&P 500 Index around 1600 range to round out some positions and might open some new posiitions around 1575 range. If this miss led you I am so sorry. But, buying to do some rounding is exactly what I did Thursday and I still have some more round out buying to do. I'd like to follow the market for a little while and not put it down all at once. After all, we still have July, August, September and October to go before the Sell in May axiom calls for a reentry aound the end of October and first part of November. I'll be watching the price action and the technicals more so than the calendar in adding to and opening positions.

Skeeter

scott

Reply to @Skeeter: "I did a little buying to round out some equity positions"

Individual equities or funds?

johnN

gold looks very attractive/cheap..
http://www.google.com/finance?q=gld&ei=E4XGUYj9DaS6lgOvJQ

Old_Skeet

Hi johnN,

I like CLE, Centeral Fund of Canada. I have lniked an article of why one should choose it over an ETF. http://www.forbes.com/sites/investor/2011/10/12/a-canadian-closed-end-gold-and-silver-fund-with-a-tax-break/

Skeeter

Mark

Reply to @Skeeter: I believe you mean CEF, not CLE. If not I stand corrected.

Old_Skeet

Reply to @Skeeter:

Yep, still learning to type.

Thanks,
skeeter