Topic: How To Invest

What is Pat’s commentary for the week of February 27, 2018

Article Excerpt

Here’s the text of the most-recent letter I sent to our Portfolio Management clients in late January: “Many investors now feel stock prices are too high, and offer little potential for capital gain, based on various market indicators. However, negative views like this have been common for years. The market indicators that tell a negative story today all have the same basic structure. They take some measure of market strength, or value, and compare it to the historical averages. They all touch on at least one of these three factors: how long the market has been rising; how far it has gone up during that rise; or the P/E ratio—the ratio of stock prices to per-share earnings. These three types of indicators all measure the same thing, and that’s why they tell the same story. The market rise of the past nine years is nearly unmatched in North American history. Naturally it beats the averages. This, though, is something of an illusion. That’s because…