No stock picks today – nothing to trade. Begs the question – does this Summer Market Melt Up continue – or does something break – and if something breaks, will it be Stocks or Bonds (or both)?
Here are a few opinions:
- Barrons – How to Play the Stock Market’s Melt-Up – Barron’s
- MarketWatch – 10 charts show why market may be ripe for a correction
Of course – you need to ask yourself, what is my upside vs. downside. The valuation measures I follow suggest that the real risk is to the downside:
| Market Valuations: | Current | Mean | Delta |
| Shiller’s 10 Year PE Ratio: | 27.16 | 16.69 | 62.73% |
| Trailing 12 Month PE Ratio: | 25.3 | 15.61 | 62.08% |
| Tobin’s Q Ratio: | 1.04 | 0.68 | 52.94% |
| Market Cap to GDP: | 123.3 | 90.00 | 37.00% |
| Morningstar’s Fair Value: | 1.04 | 0.90 | 16.20% |
| Price to Sales: | 1.94 | 1.43 | 35.66% |
| Average Overvaluation: | 44.44% |
Click on the links to research further.
The average overvaluation I am showing is 44% – if you are 100% invested in equities – could you sleep at night with that kind of draw down? Might be a good time to raise some cash – for future opportunities.
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