Most investors give too much credence to the theory that prices are rational; they presume that a market collapse must have been justified by serious economic trouble.
If you are prepared for some risk, junk bonds pay about 5%, but they tend to get whacked when interest rates rise. Same with lower-yielding but higher-quality corporate bonds.
Hundreds of investors ask me questions each year about the dilemmas they confront. Their worst problem? Uncertainty. They are traumatized and become emotional or confused to the state of inaction. Even worse, they try to solve a short-term problem in a way that hurts them financially in the long run.
Generally, variations in earnings aren't nearly as impactful on glamour growth stocks as are changes in image and, well, sexiness. I often think of glamour stocks as though they are attractive women dressing to the nines.
If some stock categories get too hot-and-pricey, mass supply is created via stock offerings to tap that cheap money - and, when overdone, drives it all down.
I'm sometimes accused of being hostile to mutual funds. That's not fair, really. There is a place for them. Still, I am hostile to one thing, which is trying to use funds to time your way in and out of the market. That's a recipe for very bad results.
