RE: Question for PAA24 Aug 2018 20:29
Good evening, helium. Probably judicious to firsty state that I don’t trade the DJI. Imo it’s far too volatile, reactionary, and therefore easily manipulated. The incumbent POTUS is a past master of using social media to manipulate opinion, and in so doing, move markets. To what end, I’ll leave you to decide. Ideally however, they are not the market’s that will move me. Having said that, there will be many who concur with your friend in that the DOW would appear top heavy. On a personal level, I learned many moons ago that whatever macro view I might hold, that is not necessarily the view other participants in the market will take. I was a bear for years yet experienced the dubious pleasure of watching a market I opted out of rise.
Sooner or later valuations will matter though. When is all going well it is all too easy to overlook the fundamentals of any business that *should* denote its value. And in the age of Trump, where real news is branded ‘fake news’ and commonly understood to be fake news from the likes of Alex Jones and infowars, or, Breitbart is now somehow considered worthy, then it really is hard to tell when the madness will end. The fact is that, yes, by almost any measure, the DJI is overvalued right now, and so, ultimately, things will probably end badly. If you’ve done well, now might very well prove a prudent time to realise some gains and move a good part of your portfolio into cash. Of course there’s every chance markets could move higher from here - I wouldn’t be surprised at all - however better that than watching your gains erode because when a market turns, it can turn very quickly.
Regards,
per ardua ad astra
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