Quote of the Week

The term bubble should indicate a price that no reasonable future outcome can justify.—-Clifford Asness, AQR Capital

Valuation gurus come to different conclusions about this market, but most do not think stocks are in a bubble.  The consensus is that stocks are slightly above long-term average valuations.  Whether those valuations turn out to be reasonable or not will depend on future earnings, but bubble does not seem to describe the current situation, at least by the definition proposed by Mr. Asness.  The “bubble” word, it seems, is mainly used to scare people—or to compensate for missing the market last year.  The trend is your friend, until it ends.

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