Commodities can get expensive and cheap.
Televisions can be expensive and cheap.
Stocks are driven by mood and all kinds of supply and demand issues and the words expensive and cheap should not be reasons to own a stock. Wall Street has their fingers in this pie as well so caveat emptor.
I strongly believe that most investors should be dollar cost averaging into low cost ETF’s. On the whole, relative to certain periods in history, the global markets can be relatively cheap and expensive, but I don’t rely on the terms at all. What makes me skeptical of the ‘cheap’ ‘expensive’ argument with respect to markets are the ever increasing monetary arms of global governments and the internet. The internet is the printing press times 100. It is knowledge and power and addictive. It is leverage that can’t be quantified.
I want to own stocks that have growth and catalysts. Catalysts can last for 6months to 2 years. Apple has had so many product catalysts but I have held the stock because of my belief in the retail catalyst that is stronger than ever. I was at an Apple store this weekend in San Diego and it was as busy as I have ever seen it. NO NEW PRODUCTS of late.
This catalyst I outlined in 2006 on our very first episode of Wallstrip:
I dont know how many times on the way up Apple was called expensive (infinite) and now how many times on the fall to $420 it has been called cheap (infinite). I dismiss any idea with those words.
My pal Eddy outlines the faux pas as it relates to his analysis of Nike ($NKE). It is ok to pass on any and all stocks because you think they are cheap and expensive, but try to leave those words out of your analysis when talking to others. It does not fly. If you make money in stocks, you nailed a supply/demand, mood, or growth catalyst that others did not see or misinterpreted .