U.S. Stock Market Soars and Still Undervalued
For those of you that follow my posts or that trade according to the strategy outlined in “The Stock Market Outsider,” you know that the ideal buying time is when the overall market is trading at a low P/E ratio and when a fundamentally strong company has taken an unsubstantiated dip.
In my last post, I mentioned that the U.S. markets were trading at a relatively low P/E ratio compared to recent months, and that there was a strong likelihood of a correction.
Sure enough, the markets soared up the very next day and made us a lot of money.
Well this happened again today – and again a lot of us made money, myself included, as shown in the “Undervalued” Watch List below.
The market took some hard hits last week and again fell to a relatively low P/E ratio. So while most investors were selling for losses last week, we were acquiring significant portions of undervalued companies.
Does today’s rise mean the market is overvalued? Actually, it does not. The median P/E is 15.09 and median P/B is 2.06, some of the lowest values we have seen all year.
I say it all the time, but it is worth mentioning again. “Although there is never a guarantee on market movements, you can still put yourself on the winning side with buying undervalued companies when the market is low and selling overvalued companies when the market is high.”