The portfolio has been on a pretty good run over the last month or so. I’m now fully invested, having spent the last of my cash balance this week topping up Adobe Systems and buying a new holding in Microgen.
I’ve been very busy at work recently so am struggling to make much time for the blog. I am gathering ideas to write about for when I have more time later in the summer.
In the near term the markets are looking positive. 58 of the 100 companies on my watchlist are within 5% of their highs and 82 within 10% – figures a bit higher than a month ago. There seems to be a healthy degree of scepticism about valuations, especially in the US. While certain stocks seem overvalued, valuations overall seem about fair to me, and US stocks don’t actually seem to be out of line with UK stocks when you compare like with like. Valuations are at a level consistent with the latter stages of the equity cycle, though they don’t suggest in themselves that a market top is imminent. I expect the current bull market has some way to run yet, though I think we are reaching the point where it makes sense for me to focus relatively more on valuation when making any new purchases.
Trying to predict a market top in advance could well be a bit of a fool’s errand. That said, I have been doing quite a bit of reading around this recently and aim to write a post on market timing soon, work allowing. At the very least it makes sense to be well prepared for when a crash does happen, even if it is not possible to predict in advance.
I’ve written about Microgen fairly recently, after holding it briefly last year. While its recent performance has been good, the share price has been treading water for the better part of the year. The valuation seems reasonable and I think it could be due another leg up when it reports results next month.