Market Valuations and The Theory of Relativity
Depending on what metric you use to assess the stock market, equities could be cheap, expensive, or anywhere in between. Try not to be swayed by simplistic arguments based on selective analysis of historical valuations, patterns or averages. Advisors and investors should keep in mind that with so few opportunities today to find yield and appreciation, if long-term gains are to be had, stocks are where such gains are likely to be found.
Stop already with the economic data. It's enough to choke a horse. We don't mean to disparage economists as they do a service in filtering through the data in an attempt to project the direction of the stock and bond markets. A case in point is the June jobs report. Private enterprise created 288,000 new jobs in June. That number used to be enough for most investors. It indicated that the economy is recovering and that the trend of job growth was accelerating. Then someone decides that that is not enough.
It is said that water only runs downhill. With the spring thaw we are having a melt-down. But, any good plumber can make water run uphill. Just like investors can make stocks run uphill no matter what the obstacles. This stock market is in the midst of a melt-up. Almost every day it ekes out a new high and most corrections are short lived.
The domestic economic landscape in the second quarter remained mixed, after the effects of severe weather in the first quarter lingered. The Bureau of Labor Statistics lowered its third estimate of first quarter gross domestic product (GDP) to -‐2.9%, reflecting a broad-‐based contraction in many areas of the economy, including consumer spending, exports and business investment. It was the largest decline in GDP in five years. The employment situation continued its trend of modest improvement...