But just for the drill we'll leap in to see how comfortable the water is.
Pundits of all strips, firms, levels of money under management and data banks have different definitions of over-valued, richly valued or whatever is the latest term making the economic or talk-show rounds. Shakespeare might of said: "To error is human, to forgive divine," but neither of those apply to anyone in the securities business
This is hardly a logical business even though many believe in logic. One could easily make a cogent case that any business that involves humans isn't logical. Can't be. Think politicians and bureaucrats here.
In 1930 a guy named Fred C. Kelley wrote a pretty good book, Why You Win or Lose, about the stock market. In Chapter Five Kelley talked about where being illogical is wisdom. Now as a quick aside, if Kelley were around today we might want to debate his statement when it comes to politician and bureaucrats, but when it comes to investors and the market, we think he's correct.
The bond market this year with all it's yield-chasing investors as was the first half run-up in energy pretty illogical. Toss in utilities and consumer staples stocks leading for the first half and you're getting warmer. And don't forget all that easy money central banks, like in Japan, hoped commercial banks would use to make consumer and business loans.
What happened with that?
Kelley states that speculation gets a bad rap because it is assumed that speculators make their money absent sweat and tears. But everyone is a speculator, Kelley argues, even "every conservative, successful manufacturer is a speculator. He has to be. If he doesn't buy raw materials when they are cheap--at least part of the time, he'll go bankrupt."
Kelley goes on "even buying a home is speculative." How many folks discovered that one during the last Fed-incited real estate bubble?
The bottom line here is you have to decide for yourself--something global leaders hope you'll never, ever get around to--what is rational and what is irrational.
It's a big task but don't let anyone get in your way.
c.c. chance
http://www.marketwatch.com/story/us-stocks-will-be-very-disappointing-for-10-years-2014-07-11
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