It’s often argued that they don’t a bell at the top.
I would argue that we numerous bells ringing in the financial markets today.
Carl Icahn wants Apple to leverage up to boost returns to shareholders. Apple has maintained next to no debt for the better part of ten years.
Now share price is lagging and the goal is to issue a load of debt to buy back shares. Leveraging up companies that have long had little debt is a classic market mania indicator
Hilton is trying to go public. Put another way, one of the largest commercial real estate/ hospitality chains in the world is going public after being private for over 40 years…
Why go public now? Because you can raise funds cheaply in today’s high liquidity environment and you don’t want to be holding the bag when the economy slumps again.
The large financial institutions that bought homes and real estate in the slump are looking to exit. These groups and their clients didn’t get rich by being wrong.
They’ve made their profits by buying when no one else wanted to and now they’re getting out. Hedge fund Och-Ziff, PE firm Blackstone, and others are unloading their real estate portfolios.
The smart money is getting out of the market. Fortress Investment Group, Apollo Investment Group and other large “smart money” investors are literally “selling everything” they can. They’re not doing this because they expect things to improve and the market to continue to move sharply higher.
Indeed, even investment legend Warren Buffett, who has virtually never advocated against investing in stocks (with the exception of the Tech Bubble) has stated the market is “fully valued” at today’s levels.
Buffett loves stocks. He’s made his fortune investing in them. He is a near eternal optimist. For him to state the markets are fully valued and be sitting in the single largest cash hoard of his investment life is a major indicator that stocks are topping.
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Best Regards
Graham Summers
