market of stocks

For Long-Term Investors Only: It’s A Market of Stocks!


Since the beginning of April 2009, the Standard & Poor’s 500 (the stock market) has enjoyed one of the longest bull markets on record.  As a result, I am starting to hear from a lot of investors that they are becoming worried that this great bull market must soon come to an end.  As recently as my last video covering McDonald’s, I received a comment asking me the following question:

Q3 2019 hedge fund letters, conferences and more

“Would you say that right now is another Irrational Exuberance Period, a time that will be remembered in the future, as a period when many stocks were strongly overvalued?”

Frankly, I have trained myself to have no opinion on such matters as the stock market, attempting to forecast the next recession or a bear market, etc. My rationale is simple and straightforward.  As I stated many times, I believe that it is a market of stocks and not a stock market.  Unfortunately, I do not believe everyone truly understands what I mean when I say that.  Therefore, I offer the following FAST Graphs analyze out loud video titled: “it’s a market of stocks.”

This video will be a little different than my normal fair, because my goal is not to analyze a given stock or group of stocks as I typically do.  Instead, my goal is to really drive home the notion that common stocks are too unique and different to be classified with the same broad brush.  In my 50 year career, I have never seen a market that did not contain a certain amount of fairly valued, overvalued and undervalued stocks.  Moreover, the stock market is also comprised of almost every conceivable type of company your mind can conceive or imagine.

Therefore, what you will see in the following video is a very diverse group of stocks that I hope clearly illustrates that the overall stock market and its valuation doesn’t really matter with many of these individual cases.  My goal is to further illustrate that it is the individual business and its past, present and future success that matters much more than what the overall (aggregate) market may or may not do.  Finally, I would hope that this video also adds perspective as to why I also recommend that investors forget about worrying about the stock market and “mind their owned businesses.”

FAST Graphs Analyze Out Loud reviewing $ABC AmerisourceBergen, $AMZN Amazon, $ASNA Ascena, $CHD Church & Dwight, $CI Cigna, $CRMT America Car Mart, $CVS, $EPD Enterprise Products, $KLIC Kulicke & Soffa, $RY Royal Bank of Canada:

Summary and Conclusion

I would like to close out this article and video by pointing out that the principles of valuation and value investing most aptly apply to true long-term investors.  At its core, value investing is analogous to what I also call “business perspective investing.”  The central idea is that prudent long-term investors position themselves as shareholder partners of good businesses that they expect to own for very long periods of time – ideally permanently or forever.  Short-term traders might find little utility in the principles of value investing.  However, most of the greatest investors that have ever walked this planet have understood and reaped the financial rewards of long-term value investing.  Unfortunately, the same cannot be said for many active traders.

Disclosure:  Long ABC, CI, CVS, EPD, RY

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

Article by F.A.S.T. Graphs

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