Sometimes, when I have no company to write about (I mean there is always something to write about, but when I see no investment opportunity) it is worth to have a look on broad market and think a little bit (here I would like to mention multipl.com website where I can find current metrics – thanks a lot, you are doing an awesome job!). S&P500 is on historical highs and you know that I will never ever buy unless I see some occasional drawdown. Also when market is high even though you see a single stock opportunity there is a low probability that it will go up when markets are down.
Look at valuation:
It is still not cheap. OK you can say that consumer companies like KO, JNJ, KMB and others dropped a little bit, but still valuation is not occasional.
Also keep in mind that dividend yields are low (which is not strange taking into account high valuation and low interest rates):
But what is more important growth of dividends is declining!
And treasury rates are going up (still they are very low).
All this makes dividend companies less and less attractive.
When looking at sectors performance we can see that the best YTD are Energy (oil prices), Industrials and Financials. The worst are Health Care and Real Estate.
Nevertheless still overall performance is very strong.
Coming back to first question – Is S&P ready for 2300?
Sure it is. The end of year should be helpful as no one needs sharp declines when annual bonuses are to be paid. On the other hand valuation on the market is high, dividends are low and interest rates are increasing. All this makes investments very risky at this moment. I really think whether I should sell some of my holdings, though I bought them to keep infinitely.
What do you think? What are your bets/expectations for 2017?