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Ben Inker, GMO Doug Short, Advisor Perspectives John Hussman, Hussman Funds Eric Cinnamond, River Road David Rolfe, Wedgewood Ron Arnott, Research Affiliates Carh Ichan, Icahn Enterprises Steven Romick, First Pacific Advisors Richard Cook and J. Dowe Bynum, Cook & Bynum Fund Richard Shiller, Yale . . .
I wondered what the old professor might be thinking? Now I know!
I think a good investor can present the case for either just as a good attorney should be able to present good arguments in making a clain or in defense of one. I am still in the overvalued, overbought camp. In short words, there is too much cash chasing too few assets and, with this, the result has become inflated stock prices. And, yes the stock market can indeed move higher even though it is overvalued and overbougt at the present time as it is about the only investment game in town right now. Look at the metals (gold & silver) they have moved lower along with the miners as money has left. Look at bonds, they have moved lower mostly out of rising interest rate fear as money leaves bond investments for stocks. This has created an increased demand for stocks and with all the cash now chasing them they have by my thinking become overvalued and overbought. The present demand for stocks is a major reason that I have not reduced my equity allocation more than I have. I am currently letting my cash build as my investments make distributions. In time, the demand for stocks will deminish and their valuation will become more in line with their fairvalue, they might even go back to selling at a discount to fair value. Again, I am of the camp they are currently overvalued and overbought as they are selling at a Trailing Twelve Month Price to Earnings Ratio of about 18.7. While their prices based upon this ratio have been higher, they are by no means cheap either.
Reply to @Mark: Agreed. I think there are values, you just have to look harder. Maybe not screaming buys, but a number of REITs are down giant from a 52 wk highs. I bought Ventas the other day, up a bit and announced an 8% dividend raise today, but still around 30% off 52 wk high.
Comments
Regards,
Ted
http://advisorperspectives.com/newsletters13/pdfs/Jeremy_Siegel-The_Market_is_10_to_15_percent_Undervalued.pdf
I wondered what the old professor might be thinking? Now I know!
I think a good investor can present the case for either just as a good attorney should be able to present good arguments in making a clain or in defense of one. I am still in the overvalued, overbought camp. In short words, there is too much cash chasing too few assets and, with this, the result has become inflated stock prices. And, yes the stock market can indeed move higher even though it is overvalued and overbougt at the present time as it is about the only investment game in town right now. Look at the metals (gold & silver) they have moved lower along with the miners as money has left. Look at bonds, they have moved lower mostly out of rising interest rate fear as money leaves bond investments for stocks. This has created an increased demand for stocks and with all the cash now chasing them they have by my thinking become overvalued and overbought. The present demand for stocks is a major reason that I have not reduced my equity allocation more than I have. I am currently letting my cash build as my investments make distributions. In time, the demand for stocks will deminish and their valuation will become more in line with their fairvalue, they might even go back to selling at a discount to fair value. Again, I am of the camp they are currently overvalued and overbought as they are selling at a Trailing Twelve Month Price to Earnings Ratio of about 18.7. While their prices based upon this ratio have been higher, they are by no means cheap either.
Thanks for posting the professor's take.
Old_Skeet
As for Siegel, perma-bull.
http://www.kiplinger.com/article/business/T019-C000-S002-my-forecast-for-2008.html
Break, break.
Heard former OMB Director David Stockman today. We can certainly add him to the roll-call on overvalued market.