Thursday, August 16, 2007

Is it a Good Time to Sell?


This article and graphic from yesterday's NY Times kind of scared me... based on long -term P/E ratios, stocks seem to be overvalued vs. historical standards. They're not as high as they were in the 1990s, but they're still at a point equaled only in the 1920s just before the big crash that led to the Great Depression. So is there nowhere to go but down? Or is there something fundamentally different about today's economy that means P/E ratios will stay higher?

9 comments:

Boomie said...

Not only should you sell and absorb your losses NOW but you should also run for the hills. This is going to be a blood bath!

mOOm said...

Using the last ten years of earnings is overly conservative I believe while just looking at this year's earnings is probably not conservative enough. I'm not selling long term investments and have bought a little. Will likely buy more when I reckon this correction is over. JMO

Anonymous said...

Sold almost all my holdings last week. Debt is finally catching up with this country. I think half of California real estate will be up for sale very soon. Read Crash Proof by Peter Schiff for more info.

Gregg said...

Sell in May is an old Wall Street adage that pays huge dividends if followed.

Anonymous said...

I think everything is too random to sell right now, of course, I'm in it for the long haul. If you sell now, you'll regret it when everything goes back up, and you'll take a big loss (Don't be emotional, and remember why you bought the things you did when you did). Good luck with your decision.

Matthew Paulson said...

Crazy...I just wrote an article about this topic. I'm definitely on the side of staying invested in the market, that's what I'm doing. Timing the market...just doesn't work.

Here's the article if you're interested:
http://www.financeispersonal.com/2007/08/why-you-should-keep-your-money-invested.html

thc said...

It doesn't say but I speculate that this chart represents US stocks. There are still lots of opportunities overseas.

Also, I'm always amused by the overreaction of amateur investors to a little bump in the road.

Tim said...

think long term rather than panicking about the market drop. we're still up on the year. besides, the market drop shouldn't be the driving force behind your decision to sell. your decision to sell should have already been established before you purchased--that is, your goals for the investments that you bought should drive your decision to sell, this includes sell triggers to protect your investments.

i bought lots of stock the past few days to the point i emptied my savings account, because there are plenty of stocks with great fundamentals that have no exposure to the subprime mess but decreased because of panic selling. go figure, most of the panic selling was from folks who tell you not to sell in a panic. also figured that there were alot of margin calls going on, driving stocks down which means even better buying opportunities for those companies with solid fundamentals.

mak said...

Great idea for a blog. Keep it up!! :-)

mak

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