No Bubbles Here, the Lady (Janet Yellen) Says

by Richard Band | November 15, 2013 9:57 am

Wow, that’s reassuring.  In her confirmation testimony today to the Senate Banking Committee, Federal Reserve chair-designate Janet Yellen insisted stocks aren’t in bubble territory.  This from the lady who, as president of the San Francisco Fed in 2005[1], argued that California home prices, which she admitted then were 70% above their historical norm, “don’t necessarily prove there’s a house-price bubble.”

Like Bernanke and Greenspan before her, Yellen stands foursquare on principle.  She simply does not, cannot and will not recognize a bubble—until it blows up in her face.  To judge the evidence any earlier, she believes, would be grossly unfair.

Great to know we’ve got another wise, deliberate and farsighted individual slipping into the big Fed chair in January!

Folks, I’m not going to toss around the bubble-word carelessly.  However, I’ll say this:  Don’t count on Yellen—or any other political appointee—to alert you when it’s time to sell your stocks.

Instead, we’re trying to listen to the market’s own message, expressed in a broad array of fundamental and technical indicators.   Right now, that message seems to be:  “I want to move higher, at least through year-end.  But problems are building.”

Rather than wait for the problems to blow up, I advise you to tweak your portfolio as we go along.  Weed out stocks that could give you grief down the road.

  1. president of the San Francisco Fed in 2005:

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