The Wall Street Journal recently ran an article suggesting that the market is fairly valued.http://online.wsj.com/article/SB1000142405270230475040457732...Naturally, there are a spectrum of opinions on this matter, but my impression is that this is a basically correct statement within the range of uncertainity that accompanies such measures.This is not a sell signal. However, it does in my mind suggest that a broadly diversified mutual fund is not likely to be priced as a particularly good bargain for buying or selling at this time. However, substantial advances in the market without corresponding improvement in the fundamentals should be viewed as potential exit points for such funds.Interestingly, real interest rates are now slightly negative. Also, according to the WSJ, European markets may be a better choice vs the US. Stocks in Europe are far better priced; mostly due to the debt crisis. So, perhaps exiting US equities in favor for Europe funds would be a wise move. That is it is a better time to trade than to exit.Individual stocks on the other hand need to be evaluated on a case by case basis. Bargains may be found as well as inflated prices.
Random Walk theory teaches that the price of all mutual funds is the true value taking into account all known information. Investment opportunities come from guessing what will happen next.The weeks before earnings reports are special news periods because rules do not allow companies to say much during this quiet period. Hence, all sorts of speculation makes headlines and rules the markets.People have been relatively pessimistic about how big a bite the slow down in Europe will take out of earnings of US companies. That negativity is what makes stocks "fully valued."We all hope that earnings will turn out to be better than that, or at least to spot the stocks that will do well in spite of that. Two I just posted on Foolish Collective are Tractor Supply Company and Cytec. Alcoa did better than expected.Talking heads don't actually know much. They merely find something to think about to fill whatever media space (between the ads) they are allocated.
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