With the markets reaching record highs, and uncertainties over the elections, it’s time for all the pundits to come out of the woodwork and prognosticate as to whether we’re at the top yet.
Using trailing statistics from Stockopedia (I don’t like the forecast ones, estimated growth looks too aggressive), I see that the UKX (Footsie) is on a PE of 18.9, MCX (FTSE 250) is on 16.4, and the AXX (Int’l AIM All-share) is on 17.3.
The Footsie looks quite high, whilst the mid-caps (as measured by MCX) looks acceptable value. If you take historic PEs in the 15-16 range, then 16.4 is looking OK. The MCX has actually beaten the UKX over the last year, up 8.7% and 0.5% respectively.
Mid-caps are what interest me most of all, as I feel they have the greatest growth prospects, in general. So there seems to be slim pickings the large-caps at the moment. I did buy fag company IMT (Imperial Tobacco) recently, on account of its high divvie and reasonable valuation. A few hefty dividend payers doesn’t go amiss. The timing of my purchase seems particularly inept, as the share are down about 5% since I bought them. It’s touching its 50d MA, so hopefully that should provide some support technically. Here’s hoping, anyway. But anyway, I digress.
The AIM index is, at least theoretically, justified at being at a higher PE rating due to its putative higher growth rates. AIM is such a minefield, though, and given its poor track record, you are better off statistically being out of that market than in it. There are some very good, solid companies on AIM, to be sure, but it’s something that requires above-average skill. In retrospect, I prefer to go with low-skill investments. There are some excellent AIM investors out there; but I’m not one of them. Give me the money, not the kudos, that’s my motto.