Dear Superinvestor Bulletin Follower,
The warnings continue roll in about an expensive stock market.
ValueAct Capital's Jeff Ubben is not just talking about how expensive the market is, he is adjusting his plans because of it.
Source: Forbes
ValueAct will be returning $1.25 billion to investors on May 1 as detailed in a letter recently released.
Ubben's comments included the following:
"The broader market context is explicit to us. The S&P 500's median P/E ratio is 18 times. For most high quality companies we follow, it is much higher.......These valuations can only be justified by assuming cyclically high corporate margins will persist, a certainty of lower corporate tax rates and a risk-free rate that stays near all-time lows. We are skeptical of all of the above."
In other words only perfect conditions will do in order to justify current market valuations. The risk is clearly skewed to the downside.
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For months now we have been building the Superinvestor Bulletin Portfolio with the expectation that a significant bear market is likely going to arrive in the not too distant future.
We believe that the companies that we currently own will outperform in a bear market and extend the sizable lead over the S&P 500 that we have built to date.
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Have a great weekend!
Reese Morgan
Editor, The Superinvestor Bulletin