Stocks are currently trading at high premiums and it’s hard to find companies where there is a reasonable margin of safety. When looking at the CAPE, which is the cyclical adjusted price to earning ratio, the likely future returns from equities over the timescales of 10 to 20 years is low. Only energy seems like a reasonable investment, and maybe telecom. Both have been lagging the s&P500 for a while, but so what? Does that mean it’s time to invest?
What about taxes?
The following diagram shows us the companies in the S&P 500 with the highest share of cash held overseas. As you know, the guy at the white office is very eager to “make america great again”, and therefore bringing cash back home.
The illustration involves many great companies, but most trade at very high premiums.
Watchlist January 2018
I’m not going to make any purchase this month. In 2018, I want to focus on being a bit more passive, a bit more patient. While the frase “time in the market beats timing the market” has become very popular, there is also a saying that “patience is rewarded”. Something to think about.
If I had to buy something, it would have been something from this list:
- Kimberly Clark
- Realty Income Group
- Royal Dutch Shell
- Southern Company
- Dominion Energy
- Kinnevik B
That’s it. What is on your watchlist this month? Are you a buyer? Please do tell.