Where are you investing now? (since markets are high)

[z28dreams]

So, I normally index (US small cap, US large cap, international large cap), but every market is super-high right now.

I have some money sitting in money market accounts (5%), and I'm not sure what to do with it.

Leave it there for now? Other places that aren't so inflated?

[spino1i]

I have made $$$ in the last month or so from the markets.

Picks are:
HERO, SAY, BRL, GRMN, UNH, CHK, MPS, HMC, HLX, TTM.

I would say TTM would be a good place to put it. That stock is probably going to be the benefactor or both long-term and short-term gains. Even with the markets so high already.

[z28dreams]

Anyone think writing covered calls, or simply selling puts might be a good idea right now?

[lala]

seems like everyone is bearish these days or thinks the market is incredible, I don't understand the market is only up 6-8% YTD.

[hawk59]

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seems like everyone is bearish these days or thinks the market is incredible, I don't understand the market is only up 6-8% YTD.

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it's only may, and the market is up 20% in the past year. this is far from typical

[DesertCat]

I'm investing in the market.

What makes you think the market is "super-high" right now, because it's set new highs? In May 1991 the Dow Jones hit an all time high of 3044. It broke 4,000 in 1994, 5,000 in 1995, 6,000 in 1996, 7,000 & 8,000 in 1997, 9,000 in 1998, 10,000 and 11,000 in 1999. If you bought at the peak in 1991, you would have likely more than quadrupled your money in 8 years, if we include dividends.

The correct way to judge whether the market is fairly valued or not is to estimate it's PE ratio based on 12 month trailing earnings. I recommend trailing, not forward earnings, because forward earnings are a fantasy that hasn't happened yet. Compare the resulting ratio to historical ratios, and incorporate current day tax rates into the comparisons. i.e. dividends and capital gains taxes are at all time lows so todays investors should be willing to pay more (a higher PE ratio) for corporate earnings than investors in the 70s, 60s, 50s, etc. Adjust for earnings growth and inflation as well.

If you are capable of doing this analysis, your answer will still be clear as mud 90% of the time, i.e. unless the market is screamingly cheap or shockingly overpriced, you'll get an answer that might be worse than useless if it keeps you out of the market for extended periods of time. I.e. there were those who thought the market was overpriced throughout the entire 90s, and missed years of outperformance.

In reality you (like 99.9999% of investors) have no ability to time the market, and should consider just putting your long term savings into your index funds. You won't be able to pick the best possible time to invest, but you'll get the best possible long term results. I.e. the expectation of the stock market is >>> 5%, esp. when you factor in the more attractive effective tax rates of index funds over money market funds.

[lala]

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[ QUOTE ]
seems like everyone is bearish these days or thinks the market is incredible, I don't understand the market is only up 6-8% YTD.

[/ QUOTE ]

it's only may, and the market is up 20% in the past year. this is far from typical

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being up 20% in the past year isn't a big deal. It can still go higher

[PRE]

[ QUOTE ]
I'm investing in the market.

What makes you think the market is "super-high" right now, because it's set new highs? In May 1991 the Dow Jones hit an all time high of 3044. It broke 4,000 in 1994, 5,000 in 1995, 6,000 in 1996, 7,000 & 8,000 in 1997, 9,000 in 1998, 10,000 and 11,000 in 1999. If you bought at the peak in 1991, you would have likely more than quadrupled your money in 8 years, if we include dividends.

The correct way to judge whether the market is fairly valued or not is to estimate it's PE ratio based on 12 month trailing earnings. I recommend trailing, not forward earnings, because forward earnings are a fantasy that hasn't happened yet. Compare the resulting ratio to historical ratios, and incorporate current day tax rates into the comparisons. i.e. dividends and capital gains taxes are at all time lows so todays investors should be willing to pay more (a higher PE ratio) for corporate earnings than investors in the 70s, 60s, 50s, etc. Adjust for earnings growth and inflation as well.

If you are capable of doing this analysis, your answer will still be clear as mud 90% of the time, i.e. unless the market is screamingly cheap or shockingly overpriced, you'll get an answer that might be worse than useless if it keeps you out of the market for extended periods of time. I.e. there were those who thought the market was overpriced throughout the entire 90s, and missed years of outperformance.

In reality you (like 99.9999% of investors) have no ability to time the market, and should consider just putting your long term savings into your index funds. You won't be able to pick the best possible time to invest, but you'll get the best possible long term results. I.e. the expectation of the stock market is >>> 5%, esp. when you factor in the more attractive effective tax rates of index funds over money market funds.

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Are you adjusting your P/E ratios for where we’re currently at in the earnings cycle? It doesn’t come as a surprise that P/E ratios are cheap right now. Take a look at the historical peaks in earnings of the S&P 500 and you’ll notice that multiples during this period are only around 10. What’s worse, earnings aren’t that high right now compared to historical records, yet the average P/E isn’t even low.

You're correct; timing the market is extremely difficult. However, it's still possible to exert some sort of restraint when investing if there is a good chance that the market is overvalued. Removing your money from the stock market would be obviously foolish, however, I think it’s a great time to begin increasing your exposure to investment funds that use hedging strategies.

[gull]

I'm still investing in stocks. Historically, buy-and-hold strategies have performed very well.

Be aware that a large part of the stock market's gains are illusory. Since the value of the dollar has been falling, assets measured in dollars are now worth more dollars. Measured in gold or euros or a number of other ways, the performance of the stock market over the last few years hasn't been all too stellar.

[DesertCat]

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Be aware that a large part of the stock market's gains are illusory. Since the value of the dollar has been falling, assets measured in dollars are now worth more dollars. Measured in gold or euros or a number of other ways, the performance of the stock market over the last few years hasn't been all too stellar.

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This is a very good point and a good argument to overweight your intl. index funds in your portfolio. My only concern is the federal deficit is now getting much smaller, so the devaluation of the dollar might be ending.