07 Jul 2016 Heartland Advisors: The Importance of Being in the Know ( Portfolio )

“Valuations don’t matter.” The indifference toward valuation is troubling given the level of angst in the market. This backdrop appears to be pushing investors toward what makes them feel safe—bonds and Index funds. By spreading bets across hundreds of stocks, they hope to insulate themselves from risk. But a look at recent winners in the popular benchmarks raises more concerns than it answers. The top 20 performing names in the S&P 500 Index are trading at 40x 2016 earnings. On a price-to-book, they’re at 6x. Debt levels also leave little room for error.