Yep, sold my shares of Reynolds on Monday.......should have sold Health South as well.......gonna sell it next week.
Definitely overvalued but that can mean a lot of different things, historical valuations compared to the modern market kinda BS anyway. Just because stocks were way undervalued until like 1990 doesn't mean it is ever going to return that level unless SHTF like circa '08. It can mean a bubble pops or it could just mean much slower growth/sideways trading going forward for next few years. A lot more likely 20 P/E is the norm going forward.
I do think if you got growth stocks that have just exploded like TSLA, FB, WWAV, etc it is probably a good time to take a profit or do so as soon as it hits long-term gains territory. If your just in blue chips like SO/J&J just see what happens....
I do think if you got growth stocks that have just exploded like TSLA, FB, WWAV, etc it is probably a good time to take a profit or do so as soon as it hits long-term gains territory. If your just in blue chips like SO/J&J just see what happens....
I thought when the Fed announced QE1, 2, 3, 4, etc. that the price would already be priced in but it kept going up and up and up. I see the reverse happening here. I just bought some SDS which is a 2X inverse of the S&P.
I read where George Soros' fund has a record high percentage of its portfolio in puts on the S&P which is either insurance against a loss or a heavy investment in such.
The doom and gloomers calling the market to tank, are usually rooting, hoping, and praying, for the market to tank, to fit their own political agenda. They're too emotionally invested in it. Each big drop, they think, and root and confidently proclaim that they're finally right. Then the market bounces back to where it was, or above, and the cycle repeats. This market is remarkably resilient for the last 5.5 years. It's like Rocky Balboa. It gets knocked down, but won't stay down, and keeps getting up and is stronger than before, no matter the cause of the decline.
The market has been resilient because the Fed has increased their balance sheet by 3.5 trillion dollars , period . When the bond market starts to get nervous about when the FED will start to unwind it, this party is over. Right now they are buying into the talk, soon they will want action
That's the whole story. Today the BOJ did their part .
Most of 3.5 trillion that the Fed has printed is parked at the Fed in the form of excess reserves, earning the banks a risk-free 25 bps. The Fed can allow their portfolio to run off, as most the money has not made it's way into the real economy, as seen by the continued decline in M2 velocity and the lack of wage pressure. Capital flows are driving our markets. When compared to the rates you can get on German bunds, JGB's, Gilds, ect, our treasuries look pretty attractive. Combine this with a lack of supply due to the shrinking of our budget deficits, and you have the most clear and logical explanation why rates remain subdued in the wake of a rising equity market. Foreigners are buying up our financial assets, and these flows will continue as the rest of the world fights off deflation and attempts to weaken their currencies.
Actually, a good portion of that money went to foreign banks, close to 700 billion. The inflation that the fed has created has been used by U.S. banks to lever up and prop up the markets. The budget deficit has come down only because of the ability to maintain these Low rates, as the Fed has rebated profits back to the treasury, the GSE are profitable because of the propped up housing markets and bond market bubble, and the tax increases . What will happen to those carry trades if the economy slips back into recession? What will the fed do? Any economic benefit we have had is ONLY because the FEd has back stopped all the reckless spending and created a stock and bond market bubble. We have been fortunate to be able to export our inflation but there is not a chance that the FED will just be able to allow their portfolio to " run off " Who will be redeeming these. Bonds anyway, and where will that money come from? The FED is now the largest owner of treasuries, and the rest of the world is betting big, we will be raising rates shortly and selling down tha balance sheet
Its not going to be pretty when this unravels
