Does it really matter? If anything, such an obsession is likely to prevent you from reaching your investment goals, especially if you act on your emotions. Chances are you will do the exact wrong thing at exactly the wrong time.
It has been my experience that stocks that are cheap go up in value and stocks that are expensive go down in value. By cheap or expensive, I refer specifically to the price of a stock relative to its expected profit growth.
Whether the market is going up or down, this construct holds true more times than not. It may seem rather simplistic and it is. A share of equity in a company is in essence a slice of the profit pie. While some pies are worth paying for, others are not.
Focus on the basics
If one must pay an inordinately high price for a smaller piece of the pie, it goes without saying what the result of that transaction will be.
So instead of fretting about the market direction in general, focus on the basics. Doing so will give you the best chance for reaching your objectives in the market – mainly beating the market at its own game.
In that spirit, let me offer three stocks that I think are priced outrageously and should be sold immediately. The more adventurous out there may want to short these stocks. The bias on these selections is downward irrespective of what the market does from here. Here are three stocks you should sell posthaste.