My last few posts have shared tools I built to help me make more tactical decisions. It's also good to zoom out though every now and then to see what the big picture looks like. I've posted before on how different regression techniques can yield different outcomes so please do your own research. Pasted below is a log regression model I built that has all kinds of fun bells and whistles. I've filtered a lot of them out though to just show the log regression and 90% confidence intervals.
With this latest move higher, you can see we are bumping back up against the top confidence interval. Before you panic to sell though, as readers of this column know, I'm also a fan of Plan B's Stock to Flow model, which I also track. The second graph shows we are really starting to catch up to its forecast.
Thus, on one view, one could argue we might be a bit expensive here while on another view, we look slightly cheap. Moral of the story? Extend your investment horizon, think long-term, and use sell-offs to add. The future looks bright my friends!
