NEW YORK (ETF Expert) -- Jobless claims have been rising. Earnings growth has been decelerating. Revenue growth has been stalling. Mortgage applications dipped to the lowest level in two decades.
Is it possible that we have been placing a little too much faith in the ability of central banks to support asset prices?
Granted, there is no reason for gloom or doom in the intermediate term. Corporate balance sheets are strong. Trailing 12-month P/Es are fairly valued or perhaps slightly overvalued. Most notably, the majority of developed world stock ETFs offer convincing technical uptrends.
Nevertheless, one should at least question the reasons behind the super-sized confidence in certain assets. In some instances, the boldness may very well be warranted. In other cases, it appears that momentum itself has superseded common sense.
You decide. Here are three exchange-traded funds and my take on the sensibility of the price movement.
1. iShares MSCI Italy
Granted, I have been willing to invest in regional growth via iShares MSCI Small Cap EAFE
2. Vanguard Extended Duration Treasury
Additionally, the technical picture supported the notion that prices were bottoming out. Today, EDV is receiving remarkable support at its 200-day long-term trendline; meanwhile, a "golden cross" by the 50-day moving average appears inevitable. Are there other reasons that investors seem to be bucking the conventional wisdom that rates had to go higher?
3. iShares Nasdaq Biotechnology
Yet, in spite of clear-cut relative strength in the ETF world, I have not chosen to board the biotech bandwagon in its purest form. Funds like SPDR Biotech
Does it make sense to buy a sub-sector that has become so speculative that it now trades at a 60% premium to a fully valued market? Is it it sensible to embrace a sub-sector investment with a price-to-book (P/B) north of 11 and a trailing price-to-earnings (P/E) of 42? Or is the biotech boom showing characteristics like the dot-com mania in 1999?
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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