6 Unscientific Ways to Tell the Market is at the Top by Attain Capital
May 12, 2014
It’s safe to say that many investors have lost money trying to predict the turn of a market, or vice versa; believing in the bull as it drops 25%. Once the aftermath is over, it always seems like the warning signs were glaring in front of our eyes the whole time, and you ask yourself why you didn’t get out in time. We’re not big on giving our two cents about what’s happening in the stock market world. It’s just not us. But instead of telling you what is, or what isn’t, we figured we’d show you some indicators that could potentially be warning signs, and let you decide for yourself. So here are the “6 could be warning signs,” that the market is at the top.
The most obvious, is of course, the market is literally… at the top. The S&P 500 and DJIA just hit new intra day all time highs, while the Russell and Nasdaq have taken a beating the past month. Which is the true indicator? Is this just the correction phase for the Russell and Nasdaq while the S&P continues to climb, or is the S&P going to eventually follow the path of the smaller indices? We’ve learned that just because something is at an all time high doesn’t necessarily mean it’s going to turn around. Cast in point, the stock market the past couple of months. But where does the run stop?
Is your home an investment or not? It’s been a hot debate on the blogs the past couple of weeks… but the extremely wealthy sure think so. Over the past couple of months, three homes have sold in the U.S. for more than $100 Million (which is a new record by the way). We discussed earlier how the housing market is only doing well for top-tier sales, compared to the rest of the market. Case in point, this home below set the world record for most expensive home sale at $147 Million. This isn’t to say that all expensive homes are selling, Billionaire Steve Cohan can’t seem to sell his four-bedroom pad in Manhattan.
3. Alibaba IPO
The tech IPO announcements continue, despite recent struggles, and this one could be the biggest of them all. For those of you who haven’t heard, Alibaba is the world version of Amazon.com, Inc. (NASDAQ:AMZN), except Alibaba is much, much bigger via Forbes; setting the stage for what could be the largest IPO offering in history.
“Though it is often compared to Amazon, the company has either full or partial ownership of businesses that compare favorably to U.S. businesses like Ebay, PayPal, Twitter and Hulu. In 2013, Ailbaba processed 11.3 billion orders worth $248 billion, well ahead of Amazon and Ebay combined, with its sales accounting for 84% of China’s online shopping.”
But it’s not just the IPO news that’s catching people’s attention. Back when people didn’t know the name Alibaba, Yahoo! Inc. (NASDAQ:YHOO) bought up a portion of the company, and currently owns 24%. It’s the latest strategy of which company owns the next for leverage. It’s appears that everyone’s trying to get their money’s worth while the goings good before it’s over. Is Yahoo! going to cash out before they think the bubble bursts?
4. Apple, Beats, and Dr. Dre (First Rap Billionaire?)
Speaking of large purchases, just last week, Apple Inc. (NASDAQ:AAPL) decided to follow in line with other large purchases of other tech companies by purchasing Dr. Dre’s iconic headphones “Beats,” for more than $3 Billion. This deal may or may not create the world’s first rap billionaire (depending on Dre’s stake in the company). Either way, we congratulate Dre’s success on cashing in on the tech bubble while he can. Add this to Facebook Inc (NASDAQ:FB) buying Whatsapp, Yahoo! buying Tumblr, and so on.
King Digital Entertainment PLC (NYSE:KING), The company behind the game “Candy Crush” went public earlier this year, and is now down almost 14% since it’s IPO date. We’ll leave the commentary for this example to someone else.
“Remember this moment boys, for as long as you live, for it is the exact moment in time when Wall St said “enough is enough.” The moment animated candies stepped onto the NYSE to mingle with the cynical alcoholics on the floor, all hope for extending the bubble died.
This is the tipping point in stock market history. It must be documented here– for the children– so that future generations learn from our mishaps.”
This one is a little bit out there, but we couldn’t resist.
Do you have $119,000 lying around that you want to spend on a vacation? Perfect! Jump aboard a one month, 9 city private tour around the world on a Four Seasons private jet. Just imagine the endless possibilities of what you could use the money for? Maybe, help fund a start up company?
So what do you think? Are these all examples of the recovered economy? Is it the direct effect of people/companies having more free cash to spend? Or are these the warning signs that the pundits say we should have noticed in a couple of months?