The analysts are fighting this rally tooth and nail. So many of them don't believe in it, don't want it and are betting on it to end and end quickly.
Last week, for example, we got multiple downgrades of the bank stocks, which have been huge winners since the election of Donald Trump. We have seen regional banks be downgraded. We have seen major banks be downgraded. We have read that they have gotten overvalued and are away ahead of themselves.
And all they did was power higher. Why not? Despite their monster moves they are so far behind the rest of the market it's pretty humorous.
Bank of America (BAC) , which has rallied from $16.60 -- it's tangible book value -- to $20 since the election, is only back to where it was in April 2010. The Dow was at 10,625 back then. It's now at almost 19,000.
KeyCorp (KEY) is only half of where it was in 2007 before the Great Recession but I could easily argue it is a much better bank now.
Action Alerts PLUS holding Citigroup (C) , which just boosted its buyback by $1.75 billion, giving it $12.2 billion in firepower, isn't even back to where it was in July 2015. Yet it has cleaned up its balance sheet, boosted its earnings power and has a tangible book value of $64. That means every dime it spends on its stock down here at $55, admitted up from $47 before the election, is additive to earnings. It's supposed to earn $5.17 per share next year but I think it can earn a lot more if it keeps buying back stock and we get a couple of rate hikes, which, frankly, seem to be in the cards.
How can these banks be ahead of themselves when they are nowhere near where they used to be but we are facing an easing of regulation, rate hikes instead of rate cuts and the possibility of ending costly litigation and slimming compliance and legal departments that are all negative for earnings? The group's a buy not a sell.
Or how about this morning when Goldman Sachs goes buy to hold on Illinois Tool Works (ITW) and 3M (MMM) . Look, I totally get that these stocks have had nice runs. Illinois Tool Works traded as low as $79 in January of this year. It is now at $123. 3M, at $171, is 37 points from its low.
But when do you get back into these stocks if you sell them? 3M is up 13% for the year. You want to get back in when it is down five? Seven? Ten? Too cute by half.
Plus, I don't want to rub it in anyone's face, but on Jan. 22, 2016 Goldman Sachs took Caterpillar (CAT) from a hold to a sell because of what it called an "extended commodity infrastructure downturn." The analyst used a price target of $51.
Today the stock is at $92. Ill-advised.
Finally, consider today's trashing of Apple (AAPL) by Oppenheimer in a piece called "The First Crack." Opco said it expects Apple iPhone sales to peak in fiscal year 2018 and that it has nothing else to take up the slack. Why? "We believe Apple lacks the courage to lead the next generation of innovation; instead it will become more reliant than ever on the iPhone." (Apple is a holding in Action Alerts PLUS.)
What will happen to Apple then? "We believe Apple is about to embark on a decade long malaise. The risks to the company have never been greater."
OK, put aside that the company might get as much as $40 a share back if the government does a massive repatriation of overseas cash.
Can we stipulate that this company's stock may be inexpensive on 10 times that fated 2018 year's earnings? Can we say that its services revenue from the tired old iPhone with more than a billion users could be gigantic, larger than a Fortune 100 company next year? Can we accept that its R&D budget will produce something new different and better? Yes, I wanted Apple to buy Harman (HAR) . No, I don't think its best days are behind it. We resolved that when the stock was at $93; here it is at $111.
I don't want to fight that tide of potential good news for Apple or for any of these stocks. So be my guest. Battle the move. But accept that you aren't necessarily selling expensive stocks. You are just selling stocks that have run, and there's a great deal of difference between the two.