The market in no way is overvalued

The market in no way is overvalued
“Davidson” Submits:

The Dallas Fed reported 12mo Trimmed Mean PCE(Inflation) at 1.7% which is inline with what we have throughout 2015-see the data table.

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Warren Buffett’s 2018 Activist Investment

Berkshire Hathaway Warren BuffettMost investors are aware of Warren Buffett's most high profile long-term investments. However, there is one long term investment that is often overlooked. Q2 2020 hedge fund letters, conferences and more This is building materials maker USG, which was owned by Berkshire Hathaway for more than 17 years before it was acquired in 2018. If Read More


The SP500 Intrinsic Value Index shifts to $1,989 as shown in the chart. With the SP500 at roughly $2,070, the market reflects a relatively low level of general speculation. However, if one examines specific situations, one finds that the top 10 performing issues in the SP500 year-to-date reported 24% return. This is in the face of the other 490 issues showing an average loss of -2.6%. It should be obvious that gains are concentrated in very few issues commonly referred to as Momentum Issues whose prices have been driven by Momentum Investors. It is easy to see which issues they are by listening to the media.

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With the least price pull-back in this small group of issues, the noise immediately rises calling for recession or major market correction. Even though Momentum Investors dominate the media, economic fundamentals do not factor into their analyses. Fundamentals are the first to alert us to potential market correction. It seems that fewer and fewer investors use fundamentals. This is why we routinely seem to get a couple of calls each year that the market is at a ‘Top’ or a ‘Correction’ is just around the corner. When markets do not correct as forecast, they move on to their next forecasts and the media carries them as loudly as before. It makes for good TV advertising revenue.

 

Being a Value Investor, I do track and analyze fundamentals. Fundamentals lead to long term investment perceptions which currently indicate that most equities are undervalued. Fundamentals remain in uptrends without any indications of a slowing near term.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.