A heavy weight is overhanging the stock market, that weight is excessive overvaluation. Investors should pay careful attention to buy recommendations by brokerages, in the print media and on television as there have been far too many so called “experts” suggesting that buying the market can be done with little risk. A bear market will have brutal consequences. The various technical and fundamental gauges listed here would indicate a downside risk of between 28% to 32% which is what occurred when these gauges were at these levels in the past. We have said many times “that odd as it may seem bull markets do not end due to overvaluation. They end with interest rates rising sharply, often with a decline in the money supply or a recession. We have not seen those indications as yet.       But keep in mind that dangerous market tops are usually accompanied by overvaluation and euphoria.” Are we seeing overvaluation and euphoria now? Yes and investors should be taking profits and continue to look for stocks that are undervalued. Again, some profits should continue to be taken off the table….as always. While we usually are near fully invested in what our analysis indicates as undervalued stocks, we see high risk in many popular and highly recommended stocks selling at the high end of their price ranges. Yet, opportunities in stocks offering exceptional capital gains are always present, particularly in the numerous forgotten and overlooked stocks that the brokerage industry does not consider despite the […]