or is it just me? Some companies are too overvalued.
2006-11-13 16:23:31 · 6 answers · asked by AmplePressure 2 in Business & Finance ➔ Investing
Certainly at any given time some companies are going to be overvalued while others are going to be undervalued relative to the norm. At some times all companies will certainly tend to be overvalued and at other times all companies will tend to be undervalued.
Personally, I tend to avoid the companies that appear to be overvalued. I also tend to hedge my investmest by buying puts on high beta indexes such as QQQQ. Doesn't hurt to take a few percautions. If the puts expire wothless, that is just fine with me. That means the rest of my portfolio has done very well. After all that is the purpose of buying insurance.
Historically speaking investment grade stocks do not appear at the moment to be overprices. On the contrary they appear to be bargain basement priced. MMM, JNJ, HD, DELL, BAC, C, GE are all trading near their historically low pe ratios. I admit this is a very puzzling inticator. Is there some fundamental reason that the blue chips are so underperforming the rest of the market. As you suggest, It may be a sign that the entire market is getting ready to drop like a rock.
2006-11-13 23:01:17 · answer #1 · answered by Anonymous · 0⤊ 0⤋
The wall street term for what you describe is 'climbing the wall of worry'. When the market is in bull mode, it is normal for sentiment to be a fairly negative. When market sentiment is very optimistic, watch out! that's is usually the reliable signal of a market top.
The market psychology behind this is simple. If some investors are negative, they still have a cash reserve that can be attracted into an investment. This provides new buyers.
When investors are optimistic, they are generally fully invested. Buying drys up, and stocks fall.
2006-11-13 22:59:09 · answer #2 · answered by bookbyte 3 · 0⤊ 0⤋
It's not just you... the market tends to react strangely from time to time. It's said that two human emotions actually drive the market: fear and greed. With those two things battling each other, it's no wonder no one can really predict what the market will do.
2006-11-14 12:02:11 · answer #3 · answered by Mike S 7 · 0⤊ 0⤋
The markets today are a victim to too many bad news!!! Ukraine, Syria and more trouble in Europe, do not help.
2015-03-10 13:31:19 · answer #4 · answered by Jan 1 · 0⤊ 0⤋
It is a market of stocks. Many high; some low. always something to buy & something to sell. Go short if sure.
2006-11-14 04:19:56 · answer #5 · answered by vegas_iwish 5 · 0⤊ 1⤋
no its not just you.... it seems that way because it is that way! you are right on track
2006-11-13 16:26:11 · answer #6 · answered by Anonymous · 0⤊ 1⤋