Using a DCF valuation of the S&P500 during 2000 and 2007, these markets were 18% and 1% overvalued before they fell. Today's S&P500 at 3015 is 15% overvalued at a P/E of 23. With growth rates and interest rates so low, a P/E of 23 is very high. Today's S&P500 and DJIA are ripe for a fall of 15 to 20% to bring them back into a fair valuation.
Target stocks to short (which are way, way overvalued) include TSLA, UBER, GDDY, SQ. You could short AAPL too on trade war escalation concerns.
BTW, I think Trump will start slapping European car markers with tariffs. This will increase the trade wars and cause world stock markets to fall to a fairer valuation.
DaddySawbucks
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NIce post tyvm.
victorko
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The discounted cash flow valuation of the S&P500 index is 2750 (using 5% growth, 8.6% discount rate) and it is now trading at 3015. Both the DJIA and S&P500 are 10 to 15% overvalued at the moment, ripe for a sell off in this broadening top formation. The market is a short from here with trade war worries and the Fed worried about cutting rates. I think the DJIA could fall down to 21000 and the S&P500 down to 2350 as per this chart.
Target stocks to short (which are way, way overvalued) include TSLA, UBER, GDDY, SQ. You could short AAPL too on trade war escalation concerns.
BTW, I think Trump will start slapping European car markers with tariffs. This will increase the trade wars and cause world stock markets to fall to a fairer valuation.