July 28, 2014

Doug Kass: 7 concerns of the market

Despite headline records, market conditions (subsurface and not-so-subsurface) could be turning, and my net short exposure reflects my concerns.

1. We have a bull market in stocks but also in complacency (a self-satisfied view that fails to take into account adverse outcomes).

2. There are technical divergences aplenty (the beneficiaries of the market melt-up are narrowing).

3. Bears have become an endangered species, and some measures of investor sentiment are at a bullish extreme.

4. The fuel of corporate buybacks (junk bonds) is starting to retreat from bubble-like conditions.

5. Geopolitical risks are multiplying geometrically.

6.The domestic economic recovery has been an exclusive one.

7. Stock valuations (adjusted for normalized profit margins) are well above the historic averages, and financial engineering may not steer us to higher P/E multiples forever.

Originally published http://www.thestreet.com/story/12822220/1/rag-doll-taking-another-crack-at-citi-best-of-kass.html