Last week, over the weekend, and even somewhat longer, there has been a recurring theme in the various media outlets. Maybe we are too plugged in, as we try to read everything possible and employ a lot of aggregators to help us decipher the vast amount of information that travels the airwaves these days.
Bubble Versus Frothy or Rich
The “B” word (bubble) is being overused today in our opinion and we wanted to clarify. Bubble means there is almost no possibility of future gain and a correction is imminent. Frothy means overvalued but not impossible from future gain. Rich is an even lighter term and means slightly over valued.
Our friend the CAPE PE Chart (10 year average earnings)
We would argue that 1987 was more Frothy than Bubble, with 2000 being a true Bubble.
Certainly we can go down 10-20% or even 30% in a Frothy environment, which we believe we are in currently. However we do not think we are in a bubble and have a 50% + correction coming as some are saying.
Ok…I feel much better now ! haha
Have a Great Day!
John Kvale CFA, CFP
PS I will be out of the very vacant office in the afternoon today!
http://www.jkfinancialinc.com http://www.steet-cents.com 8222 Douglas Ave # 590 Dallas, TX 75225
Vaccine Announcement and Capital Market Reaction Thoughts … Masters Weekend … Friday
After fielding a few curious questions on the market’s reaction to the vaccine news of Monday, we thought we would briefly give you our view of the possibilities.
As we had mentioned a few times here and here Capital Markets were likely a bit over their skis. Smartly and good in our minds after an incredibly positive reaction to the vaccine news Monday market participants realized where they were with relation to earnings and likely cooled their jets.
Said another way … had we been much lower we maybe would have had a much stronger rally but being ahead of ourselves it may have tempered higher market valuations.
Specific industries such as travel and leisure, left for dead by many, did see significant increases, albeit from extremely low levels.
Masters Weekend
For the first time the Masters a stately golf tournament in Georgia is being played in the fall. Known as one of the most elegant golf courses and well-manicured it will be interesting to watch a Sunday conclusion under much different fall colors
But today is a Friday heading into a mid-November weekend and wonderful day in our neck of the woods getting cooler but nice fall/autumn temperatures!
Enjoy and talk to you next week!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Posted in Investing/Financial Planning, Market Comments
Tagged Frothy, Masters, Over Valued, Vaccine