A View of the Markets
Board: Value Hounds
I own both Transcanada as well as CNI in significant amounts. TRN looks pretty extended to me.
But stillwater ... would you buy them NOW?
A quick glances tells us that TRP is running at a P/S of 3.5 in an industry that averages 1.4 despite the recent dip, while CNI is at a P/S of 5.2 in an industry that averages 3.4. Of course that doesn't mean that they wouldn't be good investments bought today; but IMO they aren't exactly slam-dunk Value Hound nominees right now either, would you agree? Anyway, that's my point in a nutshell.
Right or wrong, this is how I view the equity markets today:
While it seems every investor, talking head and financial journalist is currently worrying about what could happen to the market if "_________ happens," in reality, we haven't had a good catastrophe for quite a stretch. No huge banks or industries teetering on implosion, no gigantic drug scares, no Madhoff-like ponzi schemes unveiled, no nation-state defaults, no ... no disasters. Even the Greeks are quiet and we all KNEW they were toast long ago, right? Now I don't ever wish for a disaster. But they usually occur frequently enough to shake things up without any help from me and frequently enough to shake the investor-wannabe's from the experienced, patient and resilient long-term investors. Seems to me we're missing those gut-checking chart shifters right now.
Meanwhile I expect the longer this market continues to muddle through the Wall Of Worry backed by Fed purchases of USTs while no mission-critical disasters pop up for us to ponder and worry over, or to be used as a reason to pare down investment shares, the more all stock prices are becoming "correctly" priced ("correctly" defined as appropriately comparatively priced according to demand and earnings trend) and thus the harder it becomes to find sizable pricing errors made by our fellow stock picker competition.
So, while "everyone" worries about what the market will do in the near term, I find myself fully invested because there are no disasters, no wars, no huge financial crimes prosecuted or even reported, any of which would give the market a reason to take a dip or at least a breather. At least that's my reasoning. And there is technically and fundamentally speaking, no legitimate catalyst for major change. What would we do, cut shares and buy fixed-income? Simultaneously, and just to up the ante, as a group most of us are in, or nearing, retirement. Just when we need safety, it's gone completely AWOL. So we almost have to stay in this over-priced stock market bazaar. I feel that this ignoring or at least complacency regarding the increased risk (due to price levels) has become kind of the new normal while the actual risk of a deep spark-induced 180-degree downward spike could do more and deeper damage to our unrealized gains now than it would in many a "normal" market, a market where the Fed doesn't have our back and where the lawmakers aren't all asleep at the same time.
Having searched the market's basement bins and scrap piles for bargain-priced vehicles and buying "fair" as opposed to "great" investments has led me unintentially to a state I now consider to be fully diworsified. But I'm not an economist (thank goodness, as no 2 economic experts seem to agree on anything of real import--and we are to believe this is an actual science?). That and the occasional obligatory reality check lead me to very much welcome alternative and opposing views. Bring it.