Best of the Week
Most Popular
1. Five Charts That Show We Are on the Brink of an Unthinkable Financial Crisis- John_Mauldin
2.Bitcoin Parabolic Mania - Zeal_LLC
3.Bitcoin Doesn’t Exist – 2 - Raul_I_Meijer
4.Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - Nadeem_Walayat
5.Labour Sheffield City Council Election Panic Could Prompt Suspension of Tree Felling's Private Security - N_Walayat
6.War on Gold Intensifies: It Betrays the Elitists’ Panic and Augurs Their Coming Defeat Part2 - Stewart_Dougherty
7.How High Will Gold Go? - Harry_Dent
8.Bitcoin Doesn’t Exist – Forks and Mad Max - Raul_I_Meijer
9.UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - GoldCore
10.New EU Rules For Cross-Border Cash, Gold Bullion Movements - GoldCore
Last 7 days
Bitcoin Crash Sees Flight To Physical Gold Coins and Bars - 18th Jan 18
The Interest Rates Are What Matter In This Market - 18th Jan 18
Crude Oil Sweat, Blood and Tears - 18th Jan 18
Land Rover Discovery Sport - Week 3 HSE Black Test Review - 18th Jan 18
The North Korea Quagmire: Part 1, A Contest of Colonialism and Communism - 18th Jan 18
Understand Currency Trade and Make Plenty of Money - 18th Jan 18
Bitcoin Price Crash Below $10,000. What's Next? We have answers… - 18th Jan 18
How to Trade Gold During Second Half of January, Daily Cycle Prediction - 18th Jan 18
More U.S. States Are Knocking Down Gold & Silver Barriers - 18th Jan 18
5 Economic Predictions for 2018 - 18th Jan 18
Land Rover Discovery Sport - What You Need to Know Before Buying - Owning Week 2 - 17th Jan 18
Bitcoin and Stock Prices, Both Symptoms of Speculative Extremes! - 17th Jan 18
So That’s What Stock Market Volatility Looks Like - 17th Jan 18
Tips On Choosing the Right Forex Dealer - 17th Jan 18
Crude Oil is Starting 2018 Strong but there's Undeniable Risk to the Downside - 16th Jan 18
SPX, NDX, INDU and RUT Stock Indices all at Resistance Levels - 16th Jan 18
Silver Prices To Surge – JP Morgan Has Acquired A “Massive Quantity of Physical Silver” - 16th Jan 18
Carillion Bankruptcy and the PFI Sector Spiraling Costs Crisis, Amey, G4S, Balfour Beatty, Serco.... - 16th Jan 18
Artificial Intelligence - Extermination of Humanity - 16th Jan 18
Carillion Goes Bust, as Government Refuses to Bailout PFI Contractors Debt and Pensions Liabilities - 15th Jan 18
What Really Happens in Iran?  - 15th Jan 18
Stock Market Near an Intermediate Top? - 15th Jan 18
The Key Economic Indicator You Should Watch in 2018 - 15th Jan 18
London Property Market Crash Looms As Prices Drop To 2 1/2 Year Low - 15th Jan 18
Some Fascinating Stock Market Fibonacci Relationships... - 15th Jan 18
How to Know If This Stock Market Rally Will Continue for Two More Months? - 14th Jan 18
Everything SMIGGLE from Pencil Cases to Water Bottles, Pens and Springs! - 14th Jan 18
Land Rover Discovery Sport Very Bad MPG Fuel Economy! Real Owner's Review - 14th Jan 18
Gold Miners’ Status Updated - 13th Jan 18
Gold And Silver – Review of Annual, Qrtly, Monthly, Weekly Charts. Reality v Sentiment - 13th Jan 18
Gold GLD ETF Update.. Bear Market Reversal Watch - 13th Jan 18
Stock Market Leadership In 2018 To Come From Oil & Gas - 13th Jan 18
Stock Market Primed for a Reversal - 13th Jan 18
Live Trading Webinar: Discover 3 High-Confidence Trade Set-Ups - 13th Jan 18
Optimum Entry Point for Gold and Silver Stocks - 12th Jan 18
Stock Selloffs Great for Gold - 12th Jan 18
These 3 Facts Show Gold Is Set to Surge in 2018 - 12th Jan 18
How China is Locking Up Critical Resources in the US’s Own Backyard - 12th Jan 18
Stock futures are struggling. May reverse Today - 12th Jan 18
Three Surprising Places You See Cryptocurrency - 12th Jan 18
Semi Seconductor Stocks Canary Still Chirping, But He’s Gonna Croak in 2018 - 12th Jan 18
Land Rover Discovery Sport Panoramic Sunroof Questions Answered - 12th Jan 18
Information About Trading With Alpari And Its Advantages - 12th Jan 18
Stock Market Investing 2018 - “I Hope I’m Making a Bad Buy” - 11th Jan 18
S&P 500 Fluctuates As Stock Market May Be Topping, Or Not? - 11th Jan 18
SPECTRE Microprocessor Security Flaw - Big Brother = You - 11th Jan 18
7 Market Forecasts 2018 from the Brightest Financial Minds I Know - 11th Jan 18
It’s Not Enough to Be Contrarian - 11th Jan 18
Stocks That Take One for A Roller Coaster Ride Through the Thick And Thin Of Every Single Investment Made - 11th Jan 18
Police Arrest Tree Protester on Meersbrook Park Road, Sheffield - 10th Jan 18
Stock Market Aggressive Sell Signals - 10th Jan 18
The 2018 Decline in Precious Metals - 10th Jan 18
Gold Hits All-Time Highs Priced In Emerging Market Currencies - 10th Jan 18
TMV : 3X Leveraged Short on US Treasury Bonds - 10th Jan 18
Here are the Key Levels in Gold & Gold Miners - 10th Jan 18

Market Oracle FREE Newsletter

6 Critical Money Making Rules

When You Think It Can’t Get Worse, The Markets Become Even More Absurd

Stock-Markets / Stock Market 2017 Jul 27, 2017 - 05:21 PM GMT

By: John_Mauldin

Stock-Markets

BY JARED DILLIAN : The market is up 2% since I called the top a month ago.

Financial newsletters are now stuffed with bubble porn—their favorite subject is complaining about how overpriced everything is. As a financial writer, it’s tough to stay fresh when that’s all there is to talk about.


Let’s continue, nonetheless.

How Long Can This Continue?

Let me tell you a quick anecdote.

Remember a few weeks ago when Amazon said it was going to buy Whole Foods? Of course you do. From a strategic standpoint, Amazon getting into physical grocery stores is a huge deal. It even started a discussion on antitrust law in Congress.

All the supermarket stocks got caned the day it was announced, because Amazon getting into the grocery business is bad for everyone. Kroger got hit hard.

Interestingly, Kroger tapped the bond market not too long after that with a $1 billion deal, of 5s, 10s, and 30s, across maturities. People were willing to buy Kroger paper just a week or two after finding out that Amazon was going to put them out of business!

Amazing.

The bonds, priced at 180 bp over 30-yr Treasuries, then rallied. They now trade at 175 over.

Keep in mind that Kroger is a low-investment grade credit to begin with, and now people believe that Amazon is going to put it out of business.

Here is a stock chart of KR for reference:

If you are buying Kroger 30-year paper, you have to be pretty sure that Kroger is going to be around in 30 years. Will they? Probably, in some incarnation. But are you getting compensated for the risk at 4.65%?

This isn’t the dumbest bond out there. It’s actually not even close to the dumbest bond out there. But it’s a pretty good example of bond investor ebullience.

I don’t spend a lot of time shopping for individual bonds, but when I do, I cannot bring myself to get excited about marginal credits in low single-digit yields. I’ve seen quite a few cycles in credit, and this feels like all the other tops. Except even toppier.

Meanwhile, Markets Go Up

We could sit here and complain about credit, the short vol trade, etc., but you get nowhere.

Meanwhile, the NDX is up nine days straight, the S&P tech sector just made new all-time highs, and that broken chart I sent around a few weeks ago has become un-broken.

There are some bulls out there who do a sack dance every time the market makes new highs, and call people idiots for not buying Amazon. I get it. Amazon goes up every day.

You can be that bull, or you can buy an index fund. But then you buy the expensive stocks along with the cheap ones.

What’s left?

It’s a Matter of Your Style

As an investor, you have to decide: Am I a value investor? Am I a growth investor?

Momentum? Macro? Distressed?

The point is, you pick a style and you stick to it. For most people, it is when you have style drift that you get into trouble.

Take distressed investors, for instance. You could go years without seeing any opportunities. When you get outside your comfort zone and start looking at stuff that is not distressed, that is when the trouble starts.

Chances are you did not pick your investing style. It is a feature of your personality, and it has always been with you.

My investing career started in a bubble, and I was skeptical of the bubble from the very beginning. That skepticism has served me well, for the most part. I have missed out on some opportunities, but I have avoided some big crashes.

Assuming I am talking to mostly value folks here, let me ask the question: How long are you going to have to wait? Possibly a while. We could be having this conversation a year from now, with the S&P 500 at 2900, my “top” call left in the dust.

Sitting around and watching this every day is just agonizing. But every day things get a little sillier, and dreams get a little bigger. So far, Pitbull has weighed in on bitcoin and Canadian housing, and both are circling the drain.

Please, someone get him on Fast Money and ask him what he thinks of stocks.

Get Thought-Provoking Contrarian Insights from Jared Dillian

Meet Jared Dillian, former Wall Street trader, fearless contrarian, and maybe the most original investment analyst and writer today. His weekly newsletter, The 10th Man, will not just make you a better investor—it’s also truly addictive. Get it free in your inbox every Thursday.

John Mauldin Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules