<<yep, the big caps, no matter which 'economy' they hail from, are ALL in a bubble. there's simply no regard for valuation....>>
Absolutely. The entire U.S. equity market is EXTREMELY overvalued on an historical basis, using just about any indicator, especially in an environment of rising rates.
<<valuation though WILL matter again at some point...right now i'm reminded of the early '70's nifty fifty environment.>>
Except now the breadth divergences are more extreme, the bubble in terms of % of households holding equity and overall market volume is more dangerous. That's pretty shagging serious if you consider the sequelae to the nifty 50 years was the bear market of '73-'74!
<<it's like, nothing can possibly go wrong with GE. well, why not, i ask? pay 50 times earnings for a 10% earnings growth rate (increasingly inflated with stock market speculation gains earnings as it were) for a hedge fund in drag?>>
Or WMT with a PE of 50 and a long term growth rate of 15%? Or HD with a PE of 67 and a long term growth rate of 24%?
The only rationale for buying these stocks now is clear. We are in an unprecedented (well, since the 1920's) expansion of the money/credit system, and stocks are currently somewhere between the "discredit" and "revulsion" phases of the bubble (per Charles Kindleberger's excellent book, "Manias, Panics and Crashes"). The only logical investments now are CD's, gold stocks, physical gold or puts/shorts. The brokers, analysts and media (yes, you Joe Kernan) are using the "rotation" ploy to keep the public hooked a little while longer, even as they head to the exits/Hamptons. |
