02-19-2020, 11:13 PM
(02-19-2020, 09:28 PM)fenders53 Wrote:(02-19-2020, 04:44 PM)EricL Wrote:(02-19-2020, 04:16 PM)fenders53 Wrote: Thanks Eric. Still holding my breath. I've never seen Utes run like this and it is well over a year long rally now.
Oh I agree, it's crazy town in the sector.
Just looked at my water utility list, and most are trading at PE's over 30, with a few over 40. Yields well below 2%. All have EPS growth rates under 10%.
AWK and NEE are getting tough to hold. They are still underweight positions in my portfolio so I'll probably just stand pat and hold for the long term, but there's little doubt they are overvalued here.
It is crazy town indeed, and most of the Utes we hold are not growing revs anywhere near 10%. They miss earnings and go up the next day anyway. It's delusional to think the regulators will allow them to grow into the current quality tech stock PE's. I'm not selling yet, but I am NOT going to ride them into the dirt and wait 5+ years to get back to today. The first sign they are hitting a wall I am going to start selling slowly. If they take a big hit I will sell most of it and start averaging back in when the selling slows down. No need to time it perfectly. Utes at 40 PE? The don't be greedy alarm should be going off long ago. I never dreamed I would ever see Utes go momo. They no longer offer a good yield, and they no longer offer any recession protection. The market will turn on them soon enough and institutions will rush for the exit. People are still buying because they always go up. It has nothing to do with yield and defense anymore.
This is exactly how I turned 2007 into a very early retirement. I think we might survive 2020 but the bubble will pop and you won't get a deer in the headlights reaction from me.
The thing is, what alternatives are there for income investors? It is a worldwide market, and bond yields around the world are heading to zero, and in some cases are already negative. Central banks have the printing presses running and the Fed is injecting liquidity like crazy. Meanwhile, companies are buying back shares like never before, and M&A is shrinking the number of companies available in the market.
Inflation is the only way out of the debt situation for the US and the rest of the world, so its a race to the bottom with the currencies and interest rates. As long as the Fed and China continues to inject liquidity, the market keeps going higher.
Eventually the music will stop and we'll get 2000 and 2008 all over again, but it wouldn't surprise me at all if the market is another 25-50% higher before that happens. Don't fight the fed!