Tags: Tobey | bull | stocks | market

Forbes' Tobey: Shed the Stock Market Gloom and Enjoy the Bull Ride

By John Morgan   |   Wednesday, 06 Nov 2013 08:12 AM

Gloom and anxiety about the stock market being too high and setting up for a fall are just so much froth in a bull market that looks ready to continue, according to Forbes contributor John Tobey.

Tobey, a former multi-billion dollar fund manager and now editor of InvestmentDirections.com, said the stock market's double-digit returns in such a short amount of time recently are spiking investor enthusiasm upward.

However, he noted, the economy's recovery justifies an accompanying recovery in stock prices

Editor’s Note:
5 Reasons Stocks Will Collapse . . .

"This economy's underlying growth is sound and long-term prospects are positive. Aiding this view are continuing improvements in key areas (e.g., housing), supportive financial conditions, better consumer attitudes and, most important for stock investors, U.S. corporate strength and performance."

In his Forbes column, Tobey warned against investors getting too comfortable with their recent success. "The problem is that from complacency comes inertia and unpreparedness for even a normal correction."

Tobey recommended the best approach is to remain bullish, but to stay rooted in fundamentals.

"'Frothy' (and its cousin, 'bubble') are overstated descriptions of today's stock market. Missing are the tantalizing fundamentals with growth visions, wholehearted public investing in search of 'easy' gains and unilaterally bullish media coverage."

But in one sign of heightened investor expectations, buyers are piling into initial public offerings (IPOs) "at the fastest clip since the financial crisis, fueling a frenzy in the shares of newly listed companies that echoes the technology-stock craze of the late 1990s," The Wall Street Journal reported.

October was the most frenetic month for U.S.-listed IPOs since 2007, with 33 companies raising more than $12 billion, The Journal said.

In addition, leveraged buyouts in the United States, in which investors take on large amounts of debt to make corporate acquisitions, are also approaching their highest level since 2007, before the financial meltdown, according to CNBC. http://www.cnbc.com/id/101160647

"Market watchers who have been out hunting for bubbles may want to look at debt rather than equity," CNBC said.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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