Lately it’s been hard to find good investment ideas for value investors as the stock market is ripping higher than ever. Large cap companies are making big gains, such as Tesla (TSLA) with a 50% price appreciation over the last week.
It’s not just stocks. Cryptocurrencies are on the rise too, with Bitcoin rising to $90,000 USD for the first time.
The only thing that isn’t following the up trend is the bond market. As people anticipate a better economy, treasury yields go up. And when that happens, bond funds lose value. But anyone with a balanced portfolio should still be doing relatively well.
Market participants are dumping safe assets and hopping onto the risk asset trade because they have a fear of missing out on this Trump rally. But despite the current euphoria in the stock market, there is at least one value investor who is sitting this one out.
Warren Buffett has increased his cash holding to $320 billion, the most ever.
By comparison he only has $272 billion in equity investments. He’s holding more cash than stocks.
One of the most successful investors is not participating in this rally, and is in fact selling into it. Does he know something the rest of us don’t?
Either way, large moves in the market like we’ve seen recently have historically been followed by pullbacks. For shorter term traders, this could present a good opportunity to take advantage of the volatility, maybe taking some profits now. For longer term investor, this is a good reminder that the market will go up and down over time, but that shouldn’t change your buy and hold strategy.
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Random Useless Fact:
This is what muscle fibre looks like under a microscope
