Hi friends. I’ll leave the question posed in the title of this week’s post for you to ponder. I certainly have my own opinion.
I’ll share some recent August articles from the managing editor of Yahoo Finance, Sam Ro, with regard to the reasonableness of the continuing strength of the major U.S. stock indices.
Go here and here and here and here for the four articles related to the theme of this post. Please note there is one statement quoted in the second article, a statement I’ll express my personal agreement toward. The quoted remark in that article states that valuation is a poor short-term timing indicator but is the most important long-term return determinant. Of course, as you know by now, I put much emphasis on the balance sheet’s expression of equity as a primary component of value.
May God bless each of you.
Thank You for your book and blog. Personally, I would stay away from the market right now. Even with the money coming to the US, there is a limit when the market is just too overvalued. Let us remember that build up may be slow but the erosion is sudden and painful. I know that the market is quite overvalued when I run a screener to find undervalued firms and find few or NONE!
Thanks for the comment. It certainly makes for a strong case toward an overvalued market when screening for undervalued stocks yields a sparse outcome. As much money as has been poured into our economy by the Fed’s stimulating activity, the jobs number today again reflects that a healthy economy just can’t be created out of thin air. Further, it seems the stock market, in effect, has started almost hoping for numbers to be weak enough to preclude the Fed from raising rates as the market goes up on downside economic surprises like it did today. All of this too argues loudly for a stock market running wildly higher on little more than quicksand to stand upon.