Subject: Re: best way to hedge an SPY portfolio
you can at least try to avoid holding them when their valuation levels are too high to make sense. e.g., everybody loves Costco as a business and as a stock, and it deserves a premium, but I wouldn't hold it at these valuation levels (58 times trailing earnings) because if it merely returned to its own historically normal but lofty valuation levels (say, 26-31 times earnings) it would be a pretty big drop.


Problem is, you can run into a "It's not me that is wrong, it is the market that is wrong." situation.

You can wind up selling BRK-B when it becomes overvalued at 325 and watch it tromp to 490.

I am reminded of an old quote that goes something like "Aren't you glad you are a momentum investor? You don't need to sweat about valuations and financials and the like, all you need to do is look at prices."