By Brad Lamensdorf of Ranger Equity Bear and Eric Fernandez, CFA of Two Rivers Analytics, Inc.
The recent market dip notwithstanding, the US equity market remains expensive, overbought and speculative. One measure of valuation, the Total Equity Market Cap to US GDP, has reached 113%. This exceeds peaks reached in 2007 and 2000.
Current sentiment continues near bullish extremes. Whether judging by Ned Davis' research, sentimenTrader, margin debt levels or other sources, the message is the same: investors are still overly optimistic and hopeful that 2013 returns will continue.
Ranger Equity Bear's short-only ETF (HDGE) has raised its short beta and is positioned in expensive, lower quality stocks designed to take advantage of a market correction.
Only subscribers can access this article, which is part of the PRO research library covering 3,573 different stocks.
Growing numbers of fund managers and other investment professionals subscribe to Seeking Alpha PRO for equity research that is unavailable elsewhere, so they can: