Four Signs Stocks Have Peaked
Stocks have come a long way in a short time. Now, with the Dow Jones Industrial Average up 24% since October, there is growing concern that the stock market may have gotten ahead of itself.
Several important signals suggest that prices at best have topped out for the time being, and at worst are primed to move back down. Some market professionals believe technology stocks are particularly vulnerable to a fall. The upshot: Individual investors, many of whom are just now wading back into the market in a meaningful way, may want to consider ways to manage the risk, such as dividing their purchases into 12 monthly installments and investing in broad-based index funds rather than hot sectors of the market.
At least four indicators seem particularly worrisome. Corporate profits aren't expected to grow rapidly until at least early next year. In May, the amount of debt taken on to buy stocks increased nearly 8%, the biggest such jump since the market's peak three years ago -- a sign that investors may be getting irrationally exuberant again. Huge sums of money are flowing back into stock mutual funds for the first time in 18 months. And bearish sentiment is at its lowest level since early 1987, just months before a major market crash, according to Investor's Intelligence, which polls market-newsletter writers.
Such signals "are signs of a classic market top," says Charles Biderman , president of market-research firm TrimTabs.com.
Wednesday, as the Federal Reserve Board lowered short-term rates by a quarter-point, the Dow Jones average dropped 98 points to 9012. Many investors were looking for a bigger cut. Even though the market is off from its high of 9323 last week, it is still substantially above the 7286 it closed at in October.
Mr. Biderman isn't the only pro queasy about the market's altitude. McDonald Financial Group, a Cleveland brokerage firm, earlier this month told clients to take some money off the table because "all the positive catalysts for higher prices are already behind us," says John Caldwell, the firm's chief investment strategist. After the conclusion of the war in Iraq, the recent tax cuts and stronger-than-expected first-quarter earnings, he says that investors "might just be a little too excited about what will still be fairly moderate economic growth."
J.P. Morgan's private bank group also has begun "emphasizing nagging concerns about the market moving up so fast," says Chris Wolfe, head of equities for the group. Mr. Wolfe says it isn't uncommon for the market to give back one-third to one-half of the points gained in the wake of such a strong rally. If that were to happen, that would put the Standard & Poor's 500-stock index, now at 975, between 880 and 915.
All of this presents a dilemma for investors. Put your money in stocks, and you'll get burned if the recent rally isn't sustained. Stick with bonds, enjoying their own extended bull market, and you'll get burned if the economy turns up and interest rates begin moving higher. Bond prices slump when rates rise, making current bonds less attractive than newer bonds carrying higher interest payments.
Many pros say the most appropriate strategy is to systematically pare back your exposure to bonds, let that cash accumulate on the sidelines and begin to periodically increase your investments in the stock market over six months to a year. That's because over time, stocks nearly always provide the best returns.
The Once-a-Month Plan
One approach is to dollar-cost average. Identify the money you want to move into stocks, and invest one-twelfth of that amount each month. That protects you if the stock market takes a sudden dive in the next two or three months. You would lose money on your first investments, but overall your stock purchases would come at lower prices than if you shoved all your money into stocks today. At the same time, you won't be left completely on the sidelines if the bears are wrong and the market resumes its climb.
Certainly, there is no guarantee that stock prices have seen the end of their rise. Markets usually overshoot, both going up and going down. Data from market-research firm Ned Davis Research show that cyclical bull markets such as the one currently under way tend to last a bit more than a year on average and post gains of 51%.
But the gains are sometimes far smaller and the rally far shorter. Tim Hayes, global equity strategist at Ned Davis, says the current environment seems similar to the 1966-82 period. The Dow briefly brushed against 1000 in the late 1960s, but didn't stay above that mark until the early 1980s. "You could end up going sideways for a while," he says.
In the current environment, not many stocks look like bargains. Mr. Caldwell, at McDonald Financial, says the best bets appear to be in cyclical companies, as well as some media names and retailers of hard goods. His holdings include Viacom, Home Depot and Target, but each of these stocks has risen substantially, and he is leery about buying more shares at today's prices. If the market falls, though, "we'd be moving into them again," he says.
Instead of picking stocks and sectors, consider an index fund such as the Vanguard Total Stock Market Index. You'll get complete market exposure with minimal expenses. Another option is a low-cost exchange-traded fund that tracks the broader market such as the iShares Russell 3000.
Sectors to Avoid?
Pros like Mr. Caldwell are avoiding autos, high-tech and home builders. Car makers have been using heavy consumer incentives to lure buyers, and that could undercut future sales. Technology stocks, meanwhile, have had an especially big run-up; the tech-laden Nasdaq is up 44% since the fall. And while home builders have turned in huge gains, the sector can quickly head south if interest rates rise and home sales slow.
As for investors still infatuated with bonds, Mr. Biderman of TrimTabs says now is the time to take your profits. If you want to remain in bonds, then stick to those with shorter maturities, less than five years. A bond fund such as the Payden U.S. Government R is a highly rated fund with an average maturity of about three years.
The one exception: If you're among those investors who believe deflation is a threat, then hang on to some bonds with long maturities, since they'll climb in value faster than other bonds if rates continue to fall, and they kick off plumper interest payments.
四个迹象显示美国股市可能接近顶部
股市在短时间内走过了一段很长的路。道琼斯工业股票平均价格指数从去年10月份至今已经上涨了24%，人们越来越担忧股市涨幅已过大。
一些重要迹象显示，股市当前已经见顶是最好的情况，最坏的情况则是股市将再次下跌。一些市场专家相信，科技股尤其有下跌的倾向。结果是，许多目前刚刚大举回到股市的散户投资者可能希望考虑管理风险的方法，比如将他们的投资分散到12个月中，以及投资指数基金等，而不是投资市场的热门类股。
看起来至少有4个迹象尤为令人担忧。预计至少在明年初之前公司利润不会快速增长。5月份，借债用来买股票的总金额增长了将近8%，是自3年前市场见顶以来的最大增幅。而巨额资金也在18个月中第一次重新流入股票共同基金。市场悲观情绪处于自1987年初以来的最低水平，对市场新闻撰稿人进行调查的Investor's Intelligence说，在1987年初之后的几个月，市场大幅下跌。
市场研究公司TrimTabs.com总裁查尔斯?比德曼(Charles Biderman)说，这是市场处于顶部的典型迹象。
日前，美国联邦储备委员会理事会(Federal Reserve Board)将短期利率下调了25个基点。许多投资者原本期望更大的降息幅度。虽然市场从上周达到的9323点的高点回落，但仍远远高于去年10月份的7286点。
比德曼并不是唯一担心市场见顶的人。克利夫兰的经纪公司McDonald Financial Group首席投资策略师约翰?考德威尔(John Caldwell)说，该公司在本月早些时候告诉客户要从股市中撤出部分资金，原因是推动股市走高的所有有利因素都已经过去。
在伊拉克战争结束、近期的降息和第一季度收益强于预期之后，投资者可能对依然相当温和的经济增长过于兴奋。
摩根大通(J.P. Morgan)的私人银行集团股票部门负责人克里斯?乌尔夫(Chris Wolfe)说，其银行集团已经开始关注对市场已经涨幅过大的担忧。乌尔夫说，在这种强劲上扬走势之后，市场回落涨幅的三分之一到一半并非罕见。如果发生这种情况，当前为975点的标准普尔500指数将回落至880至915点。
所有这些都将使投资者处于进退两难的境地。把资金投入股市，如果近期的上涨走势不能持续的话你就会遭受损失。坚持把资金投入债市，享受债市自己的持续上涨行情，但如果经济走强而利率开始增长的话，你也会遭受损失。利率提高时债券价格会下跌，使当前债券的吸引力低于票面利率较高的新发行债券。
许多支持者说，最适当的策略是系统性地削减对债市的投资，择机离场并开始在未来6个月到1年的时间中定期提高对股市的投资。这是因为长期来看，股市的回报率最高。 一个方法是分散成本。确定你希望投资股市的资金，然后每个月投入十二分之一的资金。如果股市在未来2至3个月突然下跌的话，这种方法会为你提供保护。可能你的第一批投资会有损失，但是总体上你购买股票的成本会低于你现在将全部资金投入股市的成本。同时，如果市场上涨的话，你也不会完全袖手旁观。
当然，谁也不能保证股市已经结束上涨走势。不管上涨还是下跌，市场通常都会有过头的走势。市场研究公司Ned Davis Research的数据显示，像当前这种周期性牛市行情往往会平均持续1年以上的时间，平均涨幅为51%。 但有时市场的涨幅会很小，上涨时间也远远少于平均时间。Ned Davis的全球股票策略师提姆?海斯(Tim Hayes)说，当前的形势类似于1966年至1982年。20世纪60年代末期，道琼斯指数一度达到1000点，但是直到80年代初期才保持在1000点上方。他说，你可能最终需要旁观一段时间。
在当前环境下，并没有很多股票看起来价格偏低。McDonald Financial的考德威尔说，最好的投资目标看来是周期性股票，以及一些媒体类股票和耐用品零售商的股票。他的持股包括维亚康姆(Viacom)、Home Depot和Target，但是这些股票都已经有很大的涨幅，而且他对在当前价位买入更多股票持机警的态度。但他说，如果市场下跌，他将再次介入这些股票。 不选择股票和类股，而要考虑像Vanguard Total Stock Market Index这样的指数基金。这样你会以最小的代价来获得对市场的全面投资。另一个选择是低成本的跟踪较大范围市场的上市交易基金，如iShares Russell 3000。
考德威尔避免投资汽车、高科技和住宅建筑商类股。汽车制造商一直采用大量的消费激励措施来吸引买主，这可能会影响未来的销售。同时，科技股已经有了很大的涨幅；从去年秋季开始，纳斯达克综合指数上涨了44%。而住宅建筑商类股已经有了巨大的涨幅，一旦利率增长且住宅销售放缓的话，该类股将迅速下跌。 对于那些仍然迷恋债券的投资者，TrimTabs的比德曼说，目前是获利回吐的时候。如果你想保持对债市的投资，应该投资那些期限较短的债券，最好不超过5年。像Payden U.S. Government R这种有著较高评级的债券基金的平均债券期限大约为3年。
一个例外：如果你认为通货紧缩是一个威胁，那么你应该坚持投资那些长期债券，因为如果利率继续下降的话，这些债券价值的上涨速度要快于其他债券，而且长期债券有著较为丰厚的利息回报。
安全投资宝典
--逐步进行投资，以减轻股市下跌造成的影响。将你的总投资分散到未来12个月。
--远离已经有很大涨幅的科技股，以及因为大量促销措施可能影响未来销售的汽车类股。
--考虑波动较小的替代投资方案，比如Vanguard Total Market指数基金和iShares Russell 3000上市交易基金。
