Hi Scott: Let me start with a bold statement. Valuation? So what?
My opinion will not be conventional. You must take my comments from the perspective of my investment style. You've known me long enough and have heard me say before that I don't even look at valuations. I take huge risks. I'm not the typical investor. Don't do what I do. Consequently, my view is slanted.
Let me try to keep this simple. The gurus screaming about valuations have been screaming that for years, in fact, right through the last bull run when we all got rich. So what?
The market is like an antique or something rare priced too high, or that product that you really, really want but we all know it's priced too high. What happens? Many still buy it anyway. Bet you've done that before, too. The stock prices are balanced by what people will pay for them. Valuations too high? OK, again, so what? If folks are willing to put that money in the market, pay that much, so be it, regardless of valuation.
Yes, from a conventional standpoint, it doesn't make sense. So? That does not mean I'm going to sit on my hands and do nothing and miss a huge run like we've had from September, where some call option positions (what I like as you know) have gone up by huge multiples. Excuse me while I go to the bank and count my money while those who argue valuation continue their debate.
What are people watching as criteria to make investment decisions? If you look long term, then hey, yeah you might just sit on the sidelines and wait, and wait, until the valuations come back down. But, will they go back down to a level considered more reasonable by some folks' standards of before? What does this generation of investor consider relative to valuation? Yes, there's a different generation out there right now. People view the market differently and that factor alone has driven the market to high valuations.
So, hey, let the valuations sore. Doesn't bother me. I play the swings. I tend to think investors of the future will have a shorter term view. While I still subscribe to a dollar cost averaging for a conservative investor, I'm not so sure that is the best way anymore, especially if valuations are so high. Lessons learned from post Naz 5000 is go ahead and pull the trigger, don't be afraid to take some profits, and get out before it turns!
The trend is your friend, as the ole saying goes. Ride it hard, make your bucks, and get out when it turns the other way. Valuations don't mean squat to me from that standpoint, and I'd submit my view is not that much different from many today. Otherwise, why, why, pay for such high valuations?
Uh, did I just come full circle?
RR |
