George Soros is a billionaire. According to an unverified source, Soros believes the stock market to be overvalued. (All I could find was that he recently increased his investment in gold.) This raises a couple interesting questions.
Is George Soros more likely to be right based on his status as a billionaire? He is likely a billionaire because he was right at least once in the past. Unfortunately, it’s impossible to know whether he was right or whether he was lucky (which both look the same). And even if he’s often right, that doesn’t mean he’s right this time. After all, a market is the interaction of emotional human beings and it doesn’t obey scientific laws.
Is the Canadian stock market overvalued simultaneously with the US market? Not necessarily. But to avoid dragging out the argument, I’ll grant that I believe the Canadian stock market appears about 8% overvalued. That’s a departure from just a few weeks ago, but that’s how it presently appears. I don’t disagree with Soros that the market is overvalued.
If the market is overvalued, does that mean no one should invest? This is where I disagree perhaps. (I don’t really know what Soros is doing with his money.) Even though the market appears overvalued, I bought 200 shares SPY on Monday. That’s where the money seems to be going and I’m happy to ride that train as long as it’s heading in my direction. And that’s where I may not differ with Soros in opinion, but rather in timeline. Where he can’t move tonnes of money in and out quickly, I can easily buy and sell just a couple hundred shares of an ETF to benefit from spotting a trend. Wish me luck!