Tuesday, February 19, 2013

Are the markets getting a little frothy?

I was going to post this question late last week: Are the markets getting a little frothy? In the few days that have passed between the thought and today, all the numbers I had gathered for my post are clearly out-of-date.

My AUSE (WisdomTree Trust Australia Dividend Fund) is now up almost 20 percent from when I bought it. This is an extra gain of almost three percent in just about as many days. My SLF (Sun Life Financial Inc) is now up 37.37 percent, REM (iShares TR FTSE NAReit Mtg. Plus Capped Index Fund) is up 16.35 percent, and the list goes on: ZUT (up 16.06%), EWH (up 12.55%), RY (up 42.72%) . . . And these are all relatively recent purchases. One of my older investments, Bank of Nova Scotia (BNS), is up more than 106 percent! That is worth an exclamation mark.

Mark Carney, talking about what he sees as a housing bubble in Canada, said recently: "Real wealth is built through innovation, and it’s gained through hard work. It’s not through some magical asset inflation."

The stock market is not housing but I feel about the market the way Carney feels about housing. I applauded his statement when I first heard him make it on a television news report, and my feelings about housing values spill into the markets.

I'm not a market timer. I'll hold on for the moment but I am prepared for a eventual retreat. If the markets get too high, hard to say in advance just what constitutes "too" high, I think I'll try and sell off some of the stocks that seem to have inflated without good reason. I'm looking to have some cash on hand in order to buy after the correction.

To be honest, if history is any indication, in truth I'll buy long before the correction bottoms, but I'll do O.K.

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