Yes, it is overvalued. The whole stock market is overvalued.
People have been pumping in lots of cash and creating a sellers
market for the last four years. Is the stock a good value
compared to all other stocks? That's the question.
There are my key questions about a company:
That's what you are really buying.)
Will their revinues and earnings grow?
(Raising the value.)
Do they look like winners over the long term?
(Why would someone buy the stock from you?)
Is this a relatively safe investment?
(All stocks go up and down. Will the stock you
purchase "crash and burn"?)
If you have just started investing in the stock market,
well you missed the crash of 1987. In one day, a large
chunk of your money was gone. If you were thinking short
term, you lost big when you sold off what remained. If
you stayed put, most of the money came back in a few years.
Of course, if you just started buying recently, this is
starting to look similar to 1987. Just a little slower.
So if you bail out of the stock market, where do you go???
Fund managers have millions of dollars to spend and how are
they going to make up their losses? If any stock looks
immune to the Asian Flu, it could be a hot item.
Personally, I'm in no rush to put more money into the
stock market until things settle down. I'm in no rush
to bail out until things go up. That's a brokers nightmare!
They had better move the market one way or the other.
I expect a 500 point drop Monday then a 1500 point drop Tuesday. Haven't given the rest of the week much thought.
Of course the Fed could print up an extra 10 or 20 billion to give away on Wall Street .. naaaa, don't think so. But it'll take something of that magnitude to change the current momentium.
There's still a few puts left out there.
Thinking over the weekend about what happened on Friday is what happened in '87 and caused black Monday.
On that Friday the S&P 500 broke below its 200 day moving average. On our Friday, last, the Nasdaq and the Dow broke their 200 day moving averages. This should have given investors something to think about over the weekend.
If the S$P 500 drops more than 18 points on Monday, it will have breached its 200 day moving average. If this happens early, it might start a panic.
Things look grim. Friday they were dumping the drug and toiletry stocks with all the rest.
Globex futures for the mini S&P are at -3050. Probably momentium haulted at the end of the day Friday. However that would
represent a 30 point drop in the S&P.. about twice that of Friday. With the December rate of 9billion cash outflows from US Mutual
markets already in place, the last two days of trading will do nothing but make the situation worse. Reports seem to indicate that
some portion of the outflows Friday were foreign investers pulling money out of what used to be the great safe haven. Overseas
and domestic small investers will now have two days to think about what just happened and look at the Globex numbers. If Monday
is a continuation of Friday then Tuesday will be even worse.
Isn't MSFT due in court on Tuesday?