It's been an amazing half decade for share market valuations, with stocks now trading at record highs in the US.
The Dow is getting close to hitting 17,000 for the first time in its history as the Fed taper continues on its path, with the DJIA closing up 0.6% at 16,907.
Meanwhile the S&P 500 is close to hitting a record 2,000, up overnight by 0.77% to 1,956.
In Australia, we haven't yet scaled new share market heights. In fact, valuations are broadly unchanged in around 8 months now.
See here for a great article from value investing guru Roger Montgomery, explaining why there is no longer any deep value to be found in the Aussie market.
The easy wins of the last half decade have been picked off and now presents a far more difficult prospect to find any genuine value in the market.
The Reserve Bank's chart pack back this up, with trailing PEs firing up into the high 'teens'.
Super article, and one which I found was worth reading, digesting and then re-reading:
"Not only is there not an abundance of value, there’s a complete absence of it. As a result our process produces a relatively high level of cash on The Funds.
The combination of deteriorating earnings and economic outlook for major Australian industry sectors, along with the rising interest rates offshore (at a time of deteriorating growth) and an extended period of very low volatility make me increasingly convinced that now might just be the time to be insuring.
That could mean selling the most expensive stocks in a portfolio but it could also mean not deploying additional cash. In both The Montgomery Fund and The Montgomery [Private] Fund a relatively large proportion is already parked in the safety of cash.
While I contemplate the above, I cannot forget we manage a portfolio of quality businesses and we try to buy them at attractive prices and hold for as long as the prospects are good. It’s just the prospects part that I am becoming increasingly concerned about…"