It's been a long time since we've seen such curves (I'm not talking about the posters promoting women's swimsuits that are blooming on the walls of our cities in this cold and wet spring). I'm talking about the growth curves of stock market indices. If I remember correctly, this goes back to 1998-1999, when nothing could stop the rise of stocks. On the contrary, the less profitable companies were, the more we wanted them. The curves were rising, steeper and steeper, we wondered if they would ever be vertical. Then the bubble burst and that's a good thing (that's the nature of bubbles...).
I don't know about you, but as much as I love the mountains, the situation makes me dizzy. And when you're dizzy, you don't think properly because you have other worries. Should you sell? Should you buy (yes, yes, some stock market commentaries say this...). Should you play the 'momentum'? It's very difficult to stay calm and collected and not imagine getting up one morning and the stocks have lost 10% (which would still be an acceptable performance for ALL of 2013 if nothing else happened).
That's the problem, we compare...so let's compare! Where are the dividend yields? PE? Company results? It's in times of uncertainty that we have to go back to basics, ask ourselves if all this makes sense. A quick analysis of my stocks shows that in the end, everything doesn't seem so ridiculous: out of about twenty stocks in my portfolio, none, regardless of the industry or sector, stands out as a clearly overvalued stock (of course, 20 analysts will have 20 different opinions). All of these stocks pay at least 2% in dividends, are solid and established companies and will know how to ride the wave if necessary.
Ultimately, it also comes down to one's risk tolerance and the need to have the funds. If we can continue to sleep soundly, then let's wait.
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Thank you Armand for this very timely article. Indeed, there are quite a few things that remind me of the 90s in this stock market euphoria, or closer to us 2007. We started from very low to rise again so quickly, but fundamentally not much has changed. As if human beings remain true to themselves… and the stock market is the scene of all their exaggerations. After having lived through several of these bullish and bearish cycles, I look at all this with great detachment and I let all these little people get excited in their corner, waiting for the next correction very patiently, armed with reserves. Should we buy? Certainly not. Sell? Maybe, but not necessarily. Most of the time, on the stock market, it is better to do nothing. But that is very difficult for most people…
I share the opinions of Armand and Jerôme: waiting seems to me to be a wise solution at the moment –
I think we should take advantage of this to look more closely at the taxation that applies to the different assets that we own and their returns, which can be very variable, that is to say more or less voracious, which should not be overlooked.
I totally agree, I also remain in "hold" until the next correction. The margin of safety is zero at these valuation levels. However, there are still a few companies with good yield on which I intend to take a position, in several times (REIT and mREIT).
Thank you for your reaction. REIT and MREIT, what are they?
To answer your question, I invite you to consult this link on a partner site of dividendes.ch: http://www.devenir-rentier.fr/blog/rentier/article/94/
Thanks for the info...the funny thing is I have an investment in one of these products, but I didn't know the name!
Hence the interest in visiting certain well-stocked websites including dividendes.ch 😉
Thanks Lopazz 😉
Hello everyone,
In Belgium, there are Sicafis: I invite you to take an interest in one of them.
This is Aedifica, which specializes in retirement homes.
Good day
To get back to the subject, New York is giving us another fireworks display tonight… Plus the dollar is also rising. All my stocks are dark green, it’s nice to see but it stinks. The yield on stocks is plummeting, at the same time as the rating assigned by my algorithm. The 5 stars are disappearing while the one-star stocks are becoming more and more numerous… The ratio of total market capitalization to US GNP will soon become significantly overvalued, if things continue like this. In short, get out covered…
Indeed, the total market cap / US GDP ratio rarely misleads, even Buffett uses it. Do not sell, but do not place a purchase order: the frustration is great!
Hooray! It went downhill today! My USD wallet just wiped out all of its virtual gains from May (in EUR equivalent)!
Let the fall continue!
Quite a few titles in the red indeed. It remains to be seen whether this correction is just a flash in the pan or whether it will last.
Hemorrhage!!!! Gentlemen, our market timing is close to perfection :) One more effort, and I will soon be able to buy back!!!
Once again, the old stock market veterans have anticipated well, but be careful not to rush into the first small correction. The market is still very high.
Hello Lopazz,
I am very interested / curious / fascinated by your comment… for me, the 'dividends' approach is precisely intended to avoid chasing the fool's errand of 'market timing' (which statistically works as well as the Lotto…). Do you have a tip? Or should we read a joke into your remark?
Armand
Hello Armand,
This is the GARP (Growth At Reasonable Price) concept and the Graham margin of safety concept. Even if in the long term, with a well-diversified "dividend growth" oriented portfolio we are "sure" to be a winner, it is always better to pay less for our securities. If only to get more for the same price! There are quite a few ratios, such as the Total Market Cap/GDP and the Shiller P/E, which can also give an idea of the over- or undervaluation of the market.
Otherwise, technical analysis (MM, Fibo, RSI, etc.): very little for me.
Very little for me either… might as well take a crystal ball!
by the way I talk about the Schiller PE Ratio and Total Market Cap/GDP, in an article which joins that of Armand, here:
http://www.tendance.com/vers-une-correction-serieuse-des-marches.htm
Thank you for these explanations...but I still remain convinced that this resembles market timing, which is inherently a dangerous game and rarely a winner in the long term.
As far as I'm concerned, this is not the case: the best proof is that I have never sold a single share until now!
I think we need to differentiate between waiting for a correction from the point of view of a dividend-oriented investor, who is primarily (or only) looking to buy increasing yields at a good price, and the traditional "market timing" of a trader who wants to buy/sell (or even short sell) market movements. On the one hand, we focus on the income, on the other, on the price. On the one hand, we buy with a (safety) margin, on the other, we speculate.
I think it's rather the first definition that Lopazz wanted to refer to. I know his love for growing dividends 😉
You took the words right out of my mouth :)