Sunday, February 22, 2015

How Important are Valutions? VERY (Part 2)

So yesterday I said that valuations are super important. Look what I read today from ZH.



So apparently during the last crisis, LBO at multiples of 8-10X were considered very aggressive. Now half the market is trading over 11. Problem?

Problem.

I actually wrote about these elevated valuations back on 10 Jan 2015.

I don't want to be a crazy fearmonger, but I urge anyone that has equity holdings in the US to strongly look at their holdings and do an evaluation of them now. Are they valuations pretty stretched and well above their own long term average? Industry average? Market average? Please consider leaving the table with all your handsome profits! Extrapolating current trends out into the future is a very dangerous thing to do, because the market moves in cycles.

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