By Dan Plettner
Is it time for the market to step back and digest the recent ascent, or time for investors to step up and realize the balance of risks remains skewed to the upside?
As I discussed last month, 2011 had a frustrating feel. The volatility and tendency for managers to be challenged in outperforming indices was noteworthy even in the presence of extraordinarily attractive valuations.
In 2012, the market has rewarded some already, and bewildered others. Those who have eschewed all but Treasuries and dividend growth stalwarts have significantly underperformed the rally.
There is a lesson: price matters. When securities are priced well, they tend to outperform for some period. But “when” tends to be the market’s painful tease. What we have been seeing is usually what the masses focus on in making investment decisions, rather than what logic objectively suggests should occur. Essentially, the masses are constantly focused on the rear-view mirror. Read More
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