Outlook for November 2017

The stock markets is starting to melt upwards! The mania continues as investors pile into equities and last week saw top 3 tech companies Amazon, Microsoft and Alphabet add $144B to the market cap in just one day, equivalent of one whole IBM. Yet, everyone continues to convince themselves that this is a fundamentals-driven market. Nothing can be further from the truth. This is purely a valuations-driven market as investors pay a higher multiple on almost every metric out there — from stratospheric P/Es, P/Bs, P/Ss etc. The following chart from Hussman Funds puts the median price-to-revenue ratio of S&P 500 stocks into perspective.  

If that doesn’t sound the alarm bells, the MarketCap-to-GDP, also called the Buffett Indicator (even though Buffett did not invent the method), is now reaching 131.5%, the second highest record.

Outlook for November 2017

I have been waiting for the broad markets to normalize and in the dearth of attractive valuations, have started looking outside the mainstream of stocks and bonds for investing. While I continue to put a small amount of money into index funds on a monthly basis, I am more specifically looking at alternative investments. Over the course of last year, I have deployed a lot of capital into the commodity sector and I have surpassed my original goal for this sector, so I am now going to sit back and wait for the market to do what it does. Meanwhile, I am learning about new investment opportunities and started deploying cash into cryptoassets/blockchain-related companies & marijuana stocks etc. See some of my recent purchases here.

Our current portfolio looks like this:

As it stands, our portfolio diversification is as shown below.

What is your outlook for November 2017? What are your thoughts on the stocks mentioned here? Do you own them or are they on your watchlist? What do you think of the current market levels and buying here? Make sure to leave a comment below.

Looking for other investment ideas? Be sure to check out the Top 2017 Investment Picks from the blogging community.

Disclosure: Our full list of holdings is available here.

8 thoughts on “Outlook for November 2017

  1. I know it doesn’t fit precisely, but the first thing that came to my mind when I read the introduction to your article was Keynes’ famous quotation: “The market can remain irrational longer than you can remain solvent.” And I guess, even though we already saw a major boost in stock prices in 2017, it’s not unlikely that this stock market rally will continue.

    -David

    • yup..the market can definitely stay irrational for longer. Thats why I dont short stocks 🙂 I know eventually it will mean-revert, just dont know when. It needs an initial drop of a few percentage points before the frenzy begins…but with the central bankers and the passive investing always buying, it might take a while for that to happen. We’ll see how things go.

      Best
      R2R

  2. Wow crazy graph. Certain stoxks have skyrocketed. I have been looking at the canadian banks and keep debating selling but next quarter they should actually put out even higher numbers since rates have went up. Ill keep holding but makes buying hard at the moment.
    Cheers

  3. I’m a little nervous about the stock market valuations. I usually make one purchase to my dividend stock portfolio at the end of each month, but so far missed on making my October buy due to valuation concerns. There are many names that have not participated in the rally and that is what I’m trying to focus on (consumer staples, telecom) here in the US. Tom

    • Yup…you see most large caps outside the tech sector have falling revenues, yet the stock returns have been very good last few years. This market is completely devoid of fundamentals. Makes me want to run to the hills.

      R2R

Leave a Reply

Your email address will not be published. Required fields are marked *