‘Risk-On’ Reversal In Progress | Investing.com

Nikola Shares Rise More Than 500% Since March Lows. What's


Even in 2000, investors did not fall in love with far out-of-the-money calls on tech shares to juice gains. In 2020? The indefatigable upsurge in call options relative to put protection has been unrivaled.

S&P 500 2000-2020

S&P 500 2000-2020

Naturally, this is the sort of nonsensical bullishness that leads to heartbreak. Participants who are taking extraordinary get-rich risks might want to consider the fact the corporations have not been on their team. Stock buybacks, once a bull market support indicator, have been nosediving in 2020.

Stock Buybacks Chart

Granted, we are only talking about corrective activity here in September. And not the second stock bear of 2020.

On the flip side, nearly 30 million people still claim some sort of assistance. It’s difficult to justify the idea that the economy is on its way toward recovering pre-pandemic success.

Those who believe that the job losses are merely temporary are not paying attention. In fact, many of those ‘temporary’ furloughs and layoffs are becoming permanent, as can be verified in the month-over-month data.

Of course, the biggest issue is the silliness of overpaying for absolutely anything on the belief that the Federal Reserve can backstop assets from deflating sharply. The notion that valuation has any relevance to stock performance may have lost its near-term relevance. However, price-to-earnings ratios still have predictive power across longer periods of time.

Stock Valuations Chart

Stock Valuations Chart

With predictive power in mind, what does the following chart say about future return prospects?

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Source link

Gary Gordon


Leave a Reply

Your email address will not be published. Required fields are marked *


About us

InvestLab is a financial services technology company focused on the global trading market. Founded in 2010 in Hong Kong, the company develops trading, market data, and social research products that enable individual investors and small to mid-size brokers to access global markets. We provide brokers and financial institutions cross border capabilities for retail investors into 43 markets globally.


CONTACT US

CALL US ANYTIME