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The article linked below discusses current valuations compared to the Dot.com era. From the article


"Only the dotcom implosion was an equity bubble," says Barry Ritholtz, CIO of Ritholtz Wealth Management, noting that a bubble is typically an asset class that becomes un-moored from intrinsic value, that leads to excessive speculation, that leads to a giant market crash.
He echoes the broad consensus that while the 'Magnificent 7' clutch of mega tech stocks powering the market higher are expensive, they are not in that space yet. Expectations of $2 trillion in revenue and $300 billion profits this year see to that.
"Are they above fair value? Probably, but all great stocks are. Fair value is not a magnet that automatically draws markets there. In fact, stocks rarely find themselves at fair value," he says.

There is also a graph that shows PE values for the tech sector. Usually, graphs only show the SP500 PE values which currently appear quite high, but the current tech values do not.

https://www.reuters.com/markets/us/stock-market-cr...

For those with momentum screens, no need to panic yet????

Aussi

For those with momentum screens, no need to panic yet????

Maybe some trimming (Profit takeing) could be a good thing just in case.

GD_

"As to volatility, we know that a 10% correction comes around every once each 2 years, and that we can count on three corrections of 5% over that same time period. We cannot predict these, and have yet to find anyone else who can. We simply accept this as a part of investing, and compose our portfolios with that in mind We also try to make sure that emotionally, we are prepared for these inevitable hiccups." -- Barry Ritholtz


"Over the last 100 years the stock market has experienced on average a 5% correction three times per year, a 10% correction once per year and a 20% correction once every three and a half years.

"Stock market investors should expect to lose a little money quite often, see a correction occasionally, lose a decent amount every couple years and lose a lot of money on an Olympics-like schedule.
5% losses three times a year.
10% losses once a year.
15% losses once every two years.
20% losses once every three to four years
This realization that you know something is eventually going to happen, but you have no control over when or why it will happen can be extremely liberating as an investor. Understanding what you do and don’t know is a huge step in the right direction."
http://awealthofcommonsense.com/2017/01/how-market...

Those of us who use market trend indicators do so to have mechanical circuit breakers and decision points to specifically avoid panic. Most of the signals are to preserve capital, and especially to get out before a bad, drawn out bear.

Necessarily that means taking the 5%'ers in stride, limiting the 10%'er damage if possible (for me, at least), and being out for the times worse than 10% happen.

Markets ride the escalator up and the elevator down. I want to get off at the 2nd floor down.

Valuations, fundamentals, macro factors (except Fed rates) don't matter.

FC

Valuations, fundamentals, macro factors (except Fed rates) don't matter.

I had the impression from recently reading most of Zee's posts on the old board that he takes (or took?) quite some macro factors into account: Fed rates, Unemployment, business activity, Pres.Cyc. etc.

I had the impression from recently reading most of Zee's posts

Correct, Zee's approach has evolved into a more complex, deeper set of rules in layers. Including macro factors such as Fed cycles' impact on breadth & market direction, seasonal historical data (despite strident criticism back in the day). As well, the influence of identifying bear markets or bull markets and key transition points with bottom-finding and top-finding tools. The effectiveness of finding individual stocks using fundamental or technical factors is overwhelmed by general market directionals.

To clarify, I meant that "valuations, fundamentals...don't matter" to those who purely following mechanical indicators, a narrower statement.

FC

Flying Circus wrote: Correct, Zee's approach has evolved into a more complex, deeper set of rules in layers.

I first began posting on the MI board in 2001. My posts were primarily seeking to help in testing the research that was the bread and butter of the board's focus over the years. Rarely would I post what I was really interested in - which is Cycle Research. The reason is simple - it was rarely well received when I did share what was actually the focus of my own research. So I figured, why bother!

I can understand why you might think my research evolved and became more complex, but this is absolutely not the case. I've simply progressively shared more and more of what I consider more proprietary as the years have passed and I've grown to trust those who have gained access. Most of my research I developed in the 90s while teaching economics in the university.

So yes, my sharing has revealed more and more of my thought process and exposed deeper sets of rules and they are layers of complexity. But the vast majority was discovered and developed in the 90s, not since I began sharing on the MI board or on my own forum.

I wrote: Rarely would I post what I was really interested in - which is Cycle Research.

I happened upon this article by Howard Marks. Though I disagree with the application of what he wrote, the overall perspective is as close to a perfect match to my own thinking as anything I've ever read anywhere. So for those who would like to dig deeper into where my focus lies, this is a great first step.

https://bailiping.github.io/assets/docs/Economics/...

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Berkshire Hathaway FAQ

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