Rebalancing is helpful
during times of high valuations.
It helps a little bit
during times of high valuations (P / E10 of 17 or higher).
Fixed allocations underperform
during times of high valuations.
The balanced fund does better
during times of high valuations.
There are exceptions, especially now,
during a time of high valuations.
Not exact matches
At the
time they were used, they were effectively the result
of ambitious management teams trying to cash in on the obscene (and stupid) once - in - several - generations
valuation levels that seemed to be hitting new
highs on an almost daily basis back
during the dot - com bubble.
The gauge trades at a
valuation of 18
times reported earnings, the
highest since 2011 when it was in the middle
of a 19 percent slide, its biggest
during the current five - year bull market.
1) Overpaid players on
high salaries 2) Leave selling players at the very end
of transfer window 3) Club not knowing what their priorities are
during a transfer window by planning beforehand 4) Being too greedy for wanting
higher valuation price on average players or selling players bellow their market rate 5) Letting players hold the club to ransom by giving them game
time just to make them happy 6) Using the lack
of players leaving as an excuse for not signing more players
In that sense all analysis
of stock market based on historical metrics do nt make much sense since composition
of stocks is entirely different in different era and as more capital efficient business model evolve and their
time to market cycle shrinks stocks likely to command
higher valuations and suddenly lower
valuations during short period
of time like already happening for many technology companies and as influence
of technology on overall cost structure
of companies increases (for example: robotics replace many
of employees cost etc)
valuation matrix
of most companies likely to get affected dynamically in short duration
of time than in the past.
Question: Is the sweet spot for covered call stock selection buying solid balance sheet / good cash flow companies with a history
of paying a growing dividend (and a payout ration say less than 70 %)
during times when implied volatility may be
higher (such as now)- so
valuations for the stocks you are writing calls on are lower - despite being solid companies.
In a whipsaw period like that which we have had from 1998 to the present, it makes a lot
of difference, because many investments
during the bubble era put fresh capital into the market at a
time of high valuations, with buybacks predominating as
valuations troughed.
Here are the equations along with typical results
during times of high, typical and bargain level
valuations.
Many will choose to stay on the sidelines
during times of excessively
high valuations.