the dow stocks getting a bid is a negative for the market not a positive one.I had been thinking why these stocks are getting bought given the not so rosy macro environment.Nothing more than the lowly dividend yield. 2-4% doesn't look so bad at this point given the money markets so they will stay at these loftly levels until rates rise or percieved risk increases. That is a negative for the market because if people are willing to take on the sizable risk for paltry returns, it is the sign of a market that is too risk seeking.
Zen:I own a few Dow stocks.....XOM, MRK and INTC. I don't own a lot and except for MRK I am short calls looking to capture those dividends but I won't sell if they go down.The current "overvaluation" can be looked at in a number of ways...(1) It will go away as earnings rise from here. You don't buy that one short term? Me either, but if I knew my name would be on the door...anyway, there is also....(2) The current overvaluation will go away only after stocks wander sideways for perhaps a decade while earnings grow slower than in the recent past...stocks don't go up much but aren't that risky and pay as much current income as cash and have no more downside risk than bonds. Not a reason for you to buy, but............(3) Current valuations reflect a recognition that for very long term holders, stocks are less risky than bonds and have greater returns and this is true no matter what level you buy 'em at...it's the new paradigm. I don't buy this and I don't think you do either, but if a lot of other people do, then you and me are wrong, simple as that....(4) Stocks are gonna get smacked hard and those stocks perceived as being "high quality" because they have been around for ever and pay dividends will simply be "the last shoe to drop". Buying GM here is a way for folks who missed buying the top of the new economy (and those who didn't) to buy the top of the old economy...in which case we should all be shorting GM and IBM and IP and CAT and MRK and PG and JNJ and BAX and 'cause the day of reaconing is coming and some day they are gonna sell at 8 times earnings again.....or..(5) No matter how much the market sucks, some holders must, by their charter, own equities and some like pension funds have to own 'em because they absolutely cannot meet their actuarial assumptions any other way...so, what did you expect these guys would buy....WorldCom?Anywhoo, I own some of those stocks right now because they will be winners for me under most assumptions if I hold 'em long enough and the worst case ain't gonna break me. Lot of other people feel the same.
ok, teddy, but not one of those reasons points to a bull market. It points to a it won't kill me market.
...that's what I am seeing. There are a lot of people out there who, until a few years didn't give a rat's ass about stocks. Then all of a sudden they had Ameritrade accounts and checked the market 20 times a day.If those folks now decide that "You know, after all I have been through, I still really don't give a rat's ass about stocks....I am gonna buy a fund and forget about it.", is that capitulation, 21st century style?Could be.Me, I want to see these whore brokers and bankers and pimp financial reporters and analysts and accountants and greedy CEOs get what's coming to 'em, and that means the market comes crashing down and we, the righteous get to buy dirt cheap stocks again, just like Warren Buffett in his prime, but, you know what? Life seldom works out like it should.It's Chinatown, kid...forget it.
Me, I want to see these whore brokers and bankers and pimp financial reporters and analysts and accountants and greedy CEOs get what's coming to 'em, and that means the market comes crashing down and we, the righteous get to buy dirt cheap stocks again, just like Warren Buffett in his prime, but, you know what? Life seldom works out like it should.OH... YES!! YES!! YES!! YES!! YES!! YES!! YES!!It's Chinatown, kid...forget it. Oh... what the hell does that mean? I never saw the movie? Context suggests it's bad for the dirt-cheap buying rightuous. What about houses: do we get to someday buy those cheap again, too?
Me, I want to see these whore brokers and bankers and pimp financial reporters and analystsWhy, for being good salespeople? We all know that's their job, that's never been in question. That's why they are called brokers and not 'independent CFAs and CFPs.' They exist to sell. That's why they are called 'sell-side' analysts vs 'buy-side.'If anyone bought a stock due to a reporter's quote, man, I pity them. You don't blame a Lexus dealer for selling you an overpriced car, do you? Seriously though. How about Harvard for selling an overpriced education - MIT, Chicago, Duke, Stanford, etc? and accountants and greedy CEOs get what's coming to 'emNow that would be nice, as they are not supposed to be salesmen, except for some CEOs that we already know about.cheers,Naj
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