Consolidation and high volume are necessary to generate sufficient profits to
justify higher stock valuations given the extremely competitive and sometimes deflationary environment in the pharmaceutical retailers industry.
Historically high stock valuations, overbought conditions as measured by the relative strength index (RSI), and a closely linked combination of rising labor costs, inflation and interest rates continue to worry the bears.
Even though there has been a lot of commentary around
current high stock valuations against lackluster earnings growth for the S&P 500, it is «neither practical or precise» for an investor to use this as a basis for lowering their exposure to stocks or selling their portfolio.
Most of these large tech companies trade
at high stock valuations, so they can experience significant price declines or volatility when negative news hits them, or even just when investors get jittery in general.
Many exclaimed that ultra-low interest rates alone justified
extremely high stock valuations, including a GAAP - based price - to - earnings ratio (P / E) of 25.
Some, including another famous investor, George Soros, have suggested that the mixture
of high stock valuations and uncertainty about policy decisions under Trump could cause the market to crash.
This improved confidence should result in
higher stock valuations and further stock price appreciation.
You could have your $ 1 million in 35 years if you were able to earn 8 % a year, but I think that rate of return would be pushing it, given today's low interest rates and
high stock valuations.
Given
the high stock valuation the company will have to outperform to provide even average stock returns in the long run.
Is it possible that our failure to address the sky -
high stock valuations that have applied for over 20 years now has put us in a spot where either the negatives associated with low interest rates or the negatives associated with high stock prices are locked in?
My sense is that Chuck is being overly swayed by
the high stock valuations that have applied since 1996.