By Joshua M. Brown of The Reformed Broker
The US stock market is now selling for close to a record high valuation. Volatility for the S&P 500 is currently registering record low readings. Brilliant hedge fund managers like David Einhorn are ringing the alarm bells over the worship of growth stocks without earnings. Warren Buffett’s Berkshire Hathaway is sitting on a $90 billion cash hoard, struggling to find reasonably valued assets to invest it in. Bonds are no bargain given today’s yields vs inflation, and that’s assuming rates are just steady – if they rise more quickly than expected, there will be some pain.
Cash is abundant, the economy is steadily improving, overseas there are signs of global economic recovery, the Fed is taking its time to normalize rates, commodity prices are presenting a goldilocks scenario for consumers, US corporate earnings growth has resumed, the labor market is the healthiest it’s been in a decade (this morning, unemployment fell to the lowest reading we’ve seen since May 2007). Small business confidence is soaring, because business owners love Trump’s can-do attitude and the prospect of lower taxes.
This is the push-and-pull plateau at which we currently find ourselves. There is plenty of good news, but securities prices are currently reflecting a lot of it (all of it?).
So what do you do?
Here are your five choices:
Ignore the negatives, buy and hold…Read More