Birinyi: Exuberant phase nears

"The market is not cheap but it is not especially expensive either," writes Laszlo Birinyi, calling for the S&P 500 to take out 1,970 between now and the end of September. Lackluster economic data, so-so corporate earnings, and blowups in many Internet, social media, and biotech names aren't a concern, but instead a positive. "The overall market is shrugging off the tech and biotech problems, and that’s important ... [it's] “the last stage of a great bull market. It’s the exuberant phase.”

Of his relatively muted call (1,970 is little more than 3% above the current level): "To suggest that we will leave NY on Monday morning and arrive in LA mid-Saturday ignores the possibilities of detours, flat tires, bad weather and other realities ... We are still of the belief that this market will, like others before it, end with a burst of enthusiasm, with magazine covers and with detailed stories about the stock market perhaps even making it to page one now and again."


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Comments (4)
  • bobbobwhite
    , contributor
    Comments (2137) | Send Message
    From the biggest perma-bull this side of Larry Kudlow, these comments on the market are the most bear-like you will ever read from Birinyi. At least I can agree with him that it is "the last phase of a great bull market", and IMO is well overdue for a severe correction of 20% or more. Now 95% in cash as i won't take any bullish chances in this "exuberant phase". Odds are better now for going short.
    27 May 2014, 02:58 PM Reply Like
  • rayates44
    , contributor
    Comments (5) | Send Message
    If Laszlo is correct, what's the most lucrative way to play this?!?
    27 May 2014, 04:07 PM Reply Like
  • Nate Sterling
    , contributor
    Comments (615) | Send Message


    If Laszlo is correct (a big assumption to make), the most lucrative way to play the exuberance or euphoria phase of a raging bull market is to go aggressively long until the evidence shows the market is starting to roll over and decline at which point you go aggressively short to ride the wave down when the bubble bursts. However prudence dictates that caution is the better part of valor and it's next to impossible to time exactly when the market will hit the very top and when the market will hit the very bottom---even timing the general area of a top and the general area of a bottom are rather difficult given Mr. Market's gyrations and tendency to have smaller corrections within the macro bull uptrend---but you can think in terms of probabilities and closely monitor the objective market evidence a la Chris Ciovacco and prudently play it that way. And even if Laszlo is correct that we are going into the exuberance phase, who knows how long the exuberance or euphoria phase will last? could last as little as a couple months or it could last as long as a couple years. So it would be advisable to keep your head about you and be cautiously optimistic and prudent but not get caught with your pants down being wildly optimistic or taking excessive or imprudent risks.
    27 May 2014, 04:34 PM Reply Like
  • SmartyMarty
    , contributor
    Comments (18) | Send Message
    There are always things to worry about. I take Nate's point that no one knows how long a phase lasts. Sometimes the last leg up can be 20%. I like to keep my egs in a few baskets and watch those baskets very carefully.
    28 May 2014, 01:08 AM Reply Like
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