Infrastructure Stocks Too Hot To Be Investable

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When investing in the stock market, it is not uncommon that certain sectors will become either red-hot or stone cold. Right now, classic infrastructure stocks have become red-hot. The question is, have they become too hot to be investable?

There are times when certain sectors get hot, and they run and sometimes they run for good reasons. However, sometimes they run without good reasons.

That is really part of the dilemma, when you discover something that’s real trendy, the average lay investor tends to get caught up in the hype and the hysteria, but the problem is they’re usually late to the party. And that is one of the real dangerous aspects about trying to invest in trends. A major investment trend today is infrastructure spending. Under the current administration, there’s a lot of talk about a massive multi-trillion-dollar infrastructure spending plan. And as a result, a couple of things have happened.

Infrastructure stocks have gotten hot. Nevertheless, as an investor, the oldest adage in investing is buy low and sell high. But suddenly, the world has decided that infrastructure is a good place to invest and this surge in demand has driven their prices and valuations to stratospheric levels. More simply stated, the demand for infrastructure stocks has risen dramatically and the market has driven up their prices. That is a problem because the typical plight of the average everyday investor is that they discover the trend too late. The secret of winning from the trend is to get your money invested ahead of the trend. Now, that is easier said than done. But the reality is that until the election was settled, which was not very long ago, we really did not know what was going to happen regarding infrastructure spending.

But having said that, infrastructure has been a political bipartisan issue for quite a long time. We all have known for some time that our country’s infrastructure needs repair and refurbishing. Bridges and a lot of other infrastructures need to be rebuilt.

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Disclosure:  Long CMI.

Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks ...

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