Don’t Short a Dull Market - There is Something for Everyone

With Thursday’s close of the NASDAQ at a new all-time peak of 5056, and noting the last time we saw these levels was 15 years ago, we are somewhat comforted by the state of that market this time around.  For instance: The price to earnings ratio of the NASDAQ in 2000 was: 49.1, today its 25, price to sales then: 11.7, now 3.5 and Dividend Yield, then: .06, now 1.13.  (source NDR). The “nose bleed” valuations of the NASDAQ 15yrs reminds us that certain areas of the market place can become very frothy and stay that way for an extended period and the correction phase can last even longer.  We're confident that the fundamentals of the index are on much sounder footing and the same can be said for broader indexes such as the S&P500. 

There is something for everyone in this investment market: with Merger and Acquisition activity taking the form of big deals continues with Shell’s offer to buy BG for $70 billion and  Mylan making a bid for Perrigo and causing a “three-way” to thwart Teva’s interest in Mylan.  With a weak employment report for March that included downward revisions to prior months, we are on alert for more labor weakness in April’s upcoming figure on the job market.  The Fed is beginning its two day meeting tomorrow and all eyes will be watching for any waffling in the possibility of the first interest rate increase that might be coming in the back half of 2015.  Finally, we will leave you with, as Investors Business Daily put it last week: “Don’t short a dull market".