The Gilded Bull is Tiring -
I have been an equities investor for over 30 years, have never traded options, or shorted a stock, but feel I am a fairly-sound "value investor". A piece I saw early this evening on CNBC stating that the S&P 500 is presently valued at 5.9 X BOOK VALUE startled me. If there ever was an indicator worth it's salt, it's book value (or better yet, net tangible asset value). In translating the above value, (5.9 X), into terms we all can understand clearer, a buyer of the market as measured by the (S&P 500) at these levels, is purchasing $0.169,(reciprocal of 5.9x), of corporate assets, (tangible and INTANGIBLE), of each dollar invested in the general stock market. Good economy notwithstanding, if an investor's dollar is "buying" only $0.17 of American corporate assets, some of which are INTANGIBLE, then the stock market cannot continue the bull run very much longer. We are all well-aware of the numerous possible "impending" disaster scenarios somewhere out there on the horizon, any one of which could start this bull a tumblin'. This amazing market is in rarified air, and IMO, quite fully-valued. Any future longer-term investment in this market, must be measured against a risk/reward ratio, and invested accordingly. A prudent man would be pulling some of his chips out of the game at these levels, and protecting some of the newly-acquired wealth he/she has attained over this past glorious bull run. This is not a gloom and doom prediction, just an attempt to encourage everyone that a little prudence and/or diversification never hurt anyone. The "I'll live to play another day" attitude should prevail.
To all the shorts, options players, and daytraders, I know you guys/gals can take care of yourselves, but be careful because the price of poker (multiples) in this game has gone up considerably these past few years. As we have seen in the recent past, the downside can be quite violent when it wants to be, and that was from lower levels than we closed at today. Just let caution be the byword, as we all are aware that markets can go down as well as up.
Thanks to all for such a great thread -
MT |
