A piece of wisdom amongst investors is that “time in the market beats timing the market”. It, however, can pay sometimes to get out at a good moment and buy back at dip / downturn. Obviously, this is impossible to predict, but there might be some indicators that could give warning signs.
How about the two graphs below?
The Price-to-Book ratio (price of the share vs the book value of the assets) is almost as high as before the dot-com crisis. And it has never been higher than that. A red flag? Or is it different this time?
Or how about the graph below, showing that ‘insiders’ (corporate executives) are selling stock at record speeds.
Naturally, these two graphs could be (causally) correlated, we don’t know. We have seen a minor drop of almost 3% in the S&P500 in the last two weeks of 2024. Was that it or was that just a warning?
Sources: Micahel Kramer, The Kobeissi Letter, FT, VerityData, LSEG
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