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April 27, 2018, 9:34 a.m. EDT

How to ‘get out of the way’ of a bubble bursting for stocks

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By Barbara Kollmeyer, MarketWatch


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Bubble warnings again?

If you bought Amazon back in late March, early April, when it was getting kicked to the curb by POTUS tweets of doom, then you might be feeling like a few victory laps this morning.

Amazon’s in-your-face earnings and CEO Jeff Bezos’s bet that his millions of users are ready to pay more for Prime could be setting shares up for a record session. From its bargain basement price of $1,371.99 on Apr. 2, Amazon has climbed about 7%.

It tops off a pretty sweet week for the sector, especially the FANGS. (We’ll add another “A” — is for “Apple” — when the iPhone maker reports Tuesday.)

“Tech is on fire. AMD, Intel, Microsoft all pointing to strong tech spending. Google, Amazon and Facebook all had accelerating revenue trends, which is pretty sick for such huge companies. I mean, come on — that’s pretty nuts,” says Elazar Advisors’s Chaim Siegel, in emailed comments.

But alas, Amazon may not be able to lift all boats this morning. Dow & S&P 500 futures were in the red, even as a historic handshake was taking place at the Korean DMZ today.

Maybe it’s a good time for our call of the day from John Coumarianos, analyst at Clarity Financial, who is ready to pop your bubble with talk of all sorts of places you shouldn’t be investing right now.

“Nobody needs to own bitcoin or cryptocurrency. Also, nobody needs to own any technology stocks right now. Moreover, there are many stock markets around the world cheaper than the U.S. market,” says Coumarianos, who says the best strategy is to “get out of the way” of potential bubbles.

Where to invest, then? Emerging markets, which have their own share of volatility, but with valuations that are below U.S. stocks, the Clarity analyst says in his blog post for Real Investment Advice.

This may sound a little harsh to investors who have made a bundle on tech stocks, and some would argue that they still aren’t wildly expensive.


Real Investment Advice

Not that Coumarianos is saying you should toss out your U.S. stocks, of course, as he points to a couple of ways to “mitigate overvaluation” of those equities. He suggests exchange-traded funds with more of the cheaper stocks, such as the iShares MSCI USA Equal-Weighted ETF /zigman2/quotes/207161740/composite EUSA -0.24%  or the PowerShares FTSE RAFI US 1000 /zigman2/quotes/204234906/composite PRF -0.31%  .

Key market gauges

The Dow /zigman2/quotes/210598065/realtime DJIA -0.38%   and S&P 500 /zigman2/quotes/210599714/realtime SPX -0.80% are up a bit in the early going, while the Nasdaq /zigman2/quotes/210598365/realtime COMP -1.69%  is taking off.

Asia stocks all finished in the green. European markets /zigman2/quotes/210599654/delayed XX:SXXP +1.68% are mostly higher, which comes as the euro /zigman2/quotes/210561242/realtime/sampled EURUSD -0.1789%  continued to lose ground after Thursday's ECB meeting shed no new light.

The yield on the 10-year government bond /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +2.19%  continues to back off 3%. Gold  is up a little, and the dollar /zigman2/quotes/210598269/delayed DXY +0.22% , of course. is up. Oil  is pulling back.

See the Market Snapshot column for more.

The chart

Lumber futures have been on a bit of a tear, as our chart of the day from The Daily Shot points out, which brings up a pretty good question. How long until home buyers start paying more?

Lumbering up

Earnings

Amazon /zigman2/quotes/210331248/composite AMZN -2.14%  could see a record high, given the pace of gains thus far, after some pretty spiffy results. It also announced a 20% hike in Prime subscription prices. The jury’s still out on whether that’s a good idea or not.

Plus, Amazon has committed to streaming NFL games for another two seasons.

First Take: The engine for Amazon earnings growth has nothing to do with e-commerce

Opinion: Ranking Amazon, Alphabet, Apple and Microsoft in the race to $1 trillion in market value

/zigman2/quotes/207161740/composite
US : U.S.: NYSE Arca
$ 61.72
-0.15 -0.24%
Volume: 10,007
Aug. 11, 2020 3:54p
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/zigman2/quotes/204234906/composite
US : U.S.: NYSE Arca
$ 117.13
-0.37 -0.31%
Volume: 92,290
Aug. 11, 2020 4:00p
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
27,686.91
-104.53 -0.38%
Volume: 430.09M
Aug. 11, 2020 5:08p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,333.69
-26.78 -0.80%
Volume: 2.90B
Aug. 11, 2020 5:08p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
10,782.82
-185.53 -1.69%
Volume: 3.90M
Aug. 11, 2020 5:16p
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/zigman2/quotes/210599654/delayed
XX : STOXX
370.76
+6.11 +1.68%
Volume: 0.00
Aug. 11, 2020 11:03p
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/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
1.1721
-0.0021 -0.1789%
Volume: 0.0000
Aug. 12, 2020 12:04a
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/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
0.66
+0.01 +2.19%
Volume: 0.00
Aug. 12, 2020 12:04a
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/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
93.83
+0.20 +0.22%
Volume: 0.00
Aug. 11, 2020 11:54p
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,080.67
-67.49 -2.14%
Volume: 3.72M
Aug. 11, 2020 4:00p
P/E Ratio
118.41
Dividend Yield
N/A
Market Cap
$1576.88 billion
Rev. per Employee
$359,671
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