Gehören Sie zu den Ersten, denen das gefällt!
Shorting Overpriced Stocks
A consensus is gradually emerging regarding the stock market. Stocks are pricier than one might think. barron’s weighs in on the subject.
the standard & poor’s 500 index begins the new year with a price/earnings (p/e) multiple of about 18 times trailing 12-month earnings per share.
this represents a valuation higher than about 74% of the time since 1945. while a relatively high valuation, it remains far below its post-war record of more than 30 times earnings in early 2000, and as recently as the 1990s, the stock market delivered nice returns from valuation levels at or above today’s p/e multiple.
most u.s. stocks, however, are much more expensive than suggested by the s&p 500 index. the median new york stock exchange (nyse) stock is currently at a postwar record high p/e multiple, a record high relative to cash flow, and near a record high relative to book value!
If you are trading an ETF that tracks the S&P 500 you can look at the broader numbers. But if you are trading individual stocks you need to look at individual financials. You will find yourself more often shorting overpriced stocks than shorting the S&P 500 itself.
In retrospect it would have been great idea to short stocks in the energy sector six months ago. But, how about today? Daily Finance ask if oil stocks will go up and a good investment in the coming months.
if you are looking for stocks that you can “buy low,” the oil sector warrants some attention. over the past six months, energy select sector spdr (xle) — an exchange-traded fund focused on the energy sector — has declined about 21 percent, while the s&p 500 (^gpsc) has increased nearly 5 percent. the fidelity fund invests in more than 40 companies — including exxon mobil (xom), chevron (cvx) and schlumberger (slb) — that primarily develop and produce crude oil and natural gas and provide drilling and other energy-related services. over the same period, spdr s&p oil & gas exploration & production etf (xop), which invests in oil and gas exploration and production companies, fell more than 41 percent.
Read the article. The author goes on to say that those companies with strong fundamentals are likely to recover sooner and faster. Leave shorting overpriced stocks to the oil companies that are really in trouble and for whom a prolonged period of low crude prices will be a death knell.
Sorting Out the Chaff from the Wheat
The point of shorting overpriced stocks is that the market has had a nice run from the depths of the recession until now. It has had better than ten percent gains three years in a row. And now as the price of oil plummets traders are looker deeper into just why. Three major economies are in recession, at risk of recession and showing substantial slowdowns after years of fast growth. These economies are Japan, the EU and China.