By Barbara Kollmeyer, MarketWatch
Weinstein Company/Everett Collection
For all the angst the stock market seems to have caused recently, it looks to have been for nothing when you consider the stats — the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.40% down about 0.6% and the Nasdaq /zigman2/quotes/210598365/realtime COMP +2.13% up 0.17% with five weeks to go until the end of third quarter.
Better off at the beach?
“Sometimes the best thing to do is to do nothing, and just sit on your hands and wait,” Lance Roberts, chief investment strategist at Real Investment Advice, an independent adviser, said in a YouTube segment recently. “The markets are going to tell us what they want to do eventually,”
Onto our call of the day , which also pleads patience. It comes from Jesse Felder, a money manager who co-founded a multibillion-dollar hedge fund firm and now blogs at The Felder Report . He’s been tracking a basket of stocks he refers to as the “(not so) fantastic four” — McDonald’s /zigman2/quotes/203508018/composite MCD +0.50% , Caterpillar /zigman2/quotes/203434128/composite CAT +0.03% , Boeing /zigman2/quotes/208579720/composite BA -2.60% and 3M /zigman2/quotes/205029460/composite MMM +0.54% — or McBaM.
Those stocks outperformed the big FANG stocks — Facebook /zigman2/quotes/205064656/composite FB +1.47% , Amazon /zigman2/quotes/210331248/composite AMZN +2.65% , Netflix /zigman2/quotes/202353025/composite NFLX +1.83% and Alphabet-parent Google /zigman2/quotes/202490156/composite GOOGL +1.80% between 2016 and 2018.
Since that time, the McBaM group has fallen around 10%, but Felder argues they're still not cheap enough, making his case with the below chart, showing the group’s valuation based on average enterprise-value to revenue - the price you’d pay for a company plus the money it generates.
On that basis, he says those stocks are trading “more than 30% higher than at any other time over the past 35 years,” as long-term sales growth stumbles.
“In other words, it’s going to take a lot more 18 month periods like we have just had before these stocks approach anything near a historically normal valuation level (let alone a level that could be deemed “cheap”),” he says.
The Dow /zigman2/quotes/210598065/realtime DJIA +1.05% , S&P /zigman2/quotes/210599714/realtime SPX +1.40% and Nasdaq /zigman2/quotes/210598365/realtime COMP +2.13% are up as investors look to the start of the central bank’s annual financial symposium in Jackson Hole.
Gold is sliding, oil is up and the dollar /zigman2/quotes/210598269/delayed DXY -0.22% is doing nothing.
Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP +1.11% are mixed, while Hong Kong stocks /zigman2/quotes/210598030/delayed HK:HSI +1.42% led declines in Asia as concerns over political protests persisted.