A reader directed me to this blast from the past clip this weekend. It reminded me vividly of how lonely it was to be concerned about over-valued stock markets back near the last cycle peak. So few people where expressing any concern about the sustainability of equity prices in February 2008. The long-always crowd were trotting out the same bullish indicators they always do to support their buy-stocks-at-every-price business model. After having lost half of funds invested from 2000 to 2003, scaring most buy and hold investors out near the bottom, the market slowly recovered from 2003 to 2008, before dumping back to lower lows for the S&P into March 2009. As I mention in this conversation, price moves to previous and even lower lows with each approximately 5 year market cycle are actually the norm during secular bear markets. This clip is intense deja vu as pretty much everything I said then, applies again today. Maybe this cycle outcome will be different? Here is a direct video link.
Here is a direct link to Part 2.
This chart of the Canadian financials, offers a useful oversight of the valuation extremes the banks were flashing in 2007/08 just before they plunged 58% and today as they are perilously overbought once more. Also noted is the value opportunity they presented for purchase when we did buy them last in the spring of 2009. The failure to discern between extreme over-valuation and fair value is the surest path to capital loss over each full market cycle.
Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.
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