Q: In a recent market update you stated that the markets were approaching or beginning to appear a little frothy!!
Given that the markets have continued to reach all time highs (albeit earnings have been very good) do you continue to view the market as somewhat frothy or full on frothy??
How would you position your holdings going into a potentially frothy market?
Thank you
Tim
Given that the markets have continued to reach all time highs (albeit earnings have been very good) do you continue to view the market as somewhat frothy or full on frothy??
How would you position your holdings going into a potentially frothy market?
Thank you
Tim
5i Research Answer:
There will always be areas an investor can look at to point to froth or bubbly activity and there are today as well but overall we think markets are moving rationally. As noted, earnings have been solid, the economy might have some cracks showing but generally most aspects seem to continue to trend in the right direction.
In terms of positioning, the easiest answer is to just rebalance and trim some areas that have done well over the last few months and add to more defensive areas like fixed income or maybe more value oriented areas. If worried about market froth and valuations, it could also be a good time to review ones portfolio and just make sure allocations in single names hasn't gotten too far out of ones typical range of comfort.