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MarketWatch Opinion: Why the DOW's Top 20 Years Ago Is a Warning for Stock Investors

edited January 14 in Off-Topic
Stock investors celebrating the Dow Jones Industrial Average knocking on 29,000’s door should remember what happened exactly 20 years ago.

https://www.marketwatch.com/story/why-the-dows-top-20-years-ago-is-a-warning-for-stock-investors-now-2020-01-14

Comments

  • < You may recall that the market became overvalued in the mid-1990s, yet stock prices continued to rise for several more years before eventually succumbing to gravity.>
    Now you know what drives the market ! LOL Thanks for the link, @Old_Skeet.
    Derf
  • edited January 14
    Hi @Derf,

    Thanks for making comment.

    Just because stocks are rated overvalued, by many including myself, it does not mean that they can not continue to move upward and become more overvalued. Investor sentiment determines the price of an asset class more so than other factors. This is one of the reasons that I use my market barometer because it helps me determine when there is good value to be had in stocks through analyzing their technicals and fundamentals. I generally do not invest with the herd.

    I like to add to my equity allocation through the use of equity ballast when high barometer readings are present (oversold) and then trim from my equity ballast when low barometer readings are present (overbought). This usually results in buying low and selling high. I call these special equity positions spiffs. Currently, I have no spiff position engaged at this time.

    In addition, when investor sentiment is high ... like it is now ... Old_Skeet becomes cautious because things seem to become overbought because of strong investor enthusiasm which drives asset values beyond their true worth.
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