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.