The Little Train That Could

I am presently very surprised with the markets performance. Obamacare, debt ceilings and consumer sentiment in a downtrend has this old bull a bit scared. I am taken aback by these all times highs being reached almost on a daily schedule.  I am not complaining but when I am asked “what is causing this market to go up” I have to revert to an old adage “the market will continue to go up until it decides to go down”. That is somewhat useless information but I will never be accused of not telling the truth.

So let’s see where we are: the S&P 500 is selling at the highest Price/Earnings Ratio in several years. The normal P/E ratio somewhere between 17xs to 18x maybe this is driving force causing these all-time highs. Looking forward using regression to the mean formula the market could continue its upward climb for some time. I am working on what I see for next year but an upward move of another 10% would not be out of the realm of reality.

I am watching the foreign markets especially Japan and China very closely and if they continue with their improvement that has been exhibited for the past few months then a 10% upward move would be baked into the pie. I remain cautiously bullish and any pullback should be used as a buying opportunity.

Thanks

Bill

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About billriley

Chief Executive Officer, Chief Compliance Officer A co-founder and shareholder, William Riley is a 33 year industry veteran, who observed, many years ago, that over time institutional investors typically outperform individual investors while accepting less risk. In his role as Chief Executive Officer, Bill works tirelessly to make the wealth management strategies used by the world’s wealthiest families and largest institutions available to our firm’s individual clients. Bill combines fundamental and technical analysis to minimize investment portfolio risk and maximize potential returns. He uses a variety of non-correlated asset classes, including alternative investments, to minimize portfolio volatility and seek absolute returns in down or flat markets. Finally, Bill believes in a comprehensive approach to wealth management that fully coordinates and seamlessly integrates portfolio management, risk management and asset protection, trust, estate, tax and charitable planning. Prior to co-founding Riley Wealth Management ,LLC, Bill held management positions at Merrill Lynch, UBS, Raymond James, Paine Webber and J.C. Bradford. Bill founded Fort Worth branches for Raymond James and J.C. Bradford. Prior to entering the financial services industry, Bill ran his families closely held businesses. Bill’s experience operating family businesses combined with his wealth management experience makes him uniquely qualified to advise entrepreneurs and business owners on a variety of matters including complex and sensitive issues relating to business succession. Bill’s degrees and designations included a Masters Degree in Business Administration (MBA), the Chartered Financial Consultant designation (ChFC), the Chartered Life Underwriter designation (CLU) and the Wealth Management Specialist designation (WMS). A Fort Worth native, Bill is a TCU alum and active in many civic and charitable organizations. Bill and his wife, Marsha, now reside in Colleyville, and they have four grown children and four grandchildren. When he is not working on portfolios or studying financial markets, Bill can be found on the golf courses of Ridglea Country Club.
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