Friday, January 19, 2018

Equity market on fire...

The close today in equity market averages was alarming.  Instead of a back-off on the last day of the week, stocks were stoked until a short pause at the end.  Writing here often has noted the solid, now moving to average, fundamentals of the market and the contrary indications of a dysfunctional political scene.  This week's move showed no concern.

There is the concern here that a correction is near, or maybe that is a wish for a healthy market that needs reality checks.

An example of the out of kilter benefits of investing in equities now is this.  Nike, NKE, never bought before because of always feeling behind the curve, was added here in early August after it took a dive  It was bought at $58, then 56, next 53, then 51, not doubling down, call it 20 percenting down each time.  The analysis had been done and it ran the book.  "Analysis" is a stretch. Looked at the solid financials and decided that the stock was way oversold. Maybe it is not now the only urban sneaker of choice but this logo is global.

With the equity price now at $67 it worked.  This kind of five month turnaround in an investment is not normal in large caps, even if the investment is well researched.  Investors who do their work can stay with this but may be hurt.  Investors with little perspective could soon be scalded.


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