Good morning! I trust everyone is fully charged up with Christmas cheer. The Santa Claus rally is still in full swing, although I can't help feeling that the market will jump at the slightest chance to have a proper sell-off in the New Year. We haven't had a proper correction for a long time now, and there are considerable areas of over-valuation now in my opinion, especially growth stocks, some of which are really on bonkers valuations.

Remember that a classic sign of a bubble is when people start detaching from conventional valuation methods, and just buy things because they keep going up. I'm not saying that kind of euphoria is evident in the entire market, but it's very clear that many growth stocks are now priced to perfection. So people speculating in that area need to be mindful that there is always a risk that such stocks will, sooner or later, come back down to earth with a bump. People who were not in the market in 1998-2002 should look back at the charts of trendy growth stocks back then. People who were in the market in 1998-2002 should refresh your memories as to what happened to your own portfolio at the time - the financial memory is about 15 years they reckon, so the timing is perfect for a re-run of the TMT (technology, media & telecoms) mania that we saw in the late '90s.

Mind you, these bubbles can keep going far longer than anyone imagines, as indeed happened 15 years ago. The bubble finally burst in Mar 2000, when it had sucked in vast amounts of money into many essentially worthless (or worth very little) growth companies, and left a trail of destruction which saw numerous shares drop 90%+. Many even went to 99% losses. I'm not saying we are in the same situation yet, but we're certainly in the early stages of the "euphoria" part of a bull market, in my view.

Whether to take cover, or to make hay when the sun shines? I think it's a good time to find the most credible, and reasonably priced growth stocks, and make some money on them. But personally I'm not chasing story stocks with negligible turnover but >£100m market caps - experience has shown that the vast majority of such hyped up story stocks fail to deliver.

Remember that I'm writing from a Value/GARP perspective,…

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