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Will time soon be called on the tech rally?

Investors are now being asked to pay a staggering amount for earnings growth.
Will time soon be called on the tech rally?

This has been a very revealing week for me. I feel I have been shaken out of a mild complacency as far as the equity markets are concerned. In some ways, I feel slightly embarrassed to have written words or words to the effect of how investors should stick with quality shares in recent weeks. Don’t get me wrong. I still firmly believe this but the valuations being attached to them are now beginning to look ridiculous in some cases.

Fund managers talking their own books will talk about the folly of market timing and the benefits of buy and hold but I do wonder how many would put large sums of their own money to work in high quality shares right now. My guess is that if they were being truly honest with themselves they would have some doubts.

Whatever valuation yardstick you care to use, be it PE ratios or free cash flow yields, quality shares are very expensive and have been getting more so in recent months.

I see valuation very simply as what you get back compared with what you pay for a share. When it comes to high quality shares right now, you are not getting much back.

In this week's round-up I give my view on six companies and I also take a quick look at the valuation of my Fantasy Sipp holdings on a free cash flow yield basis. 

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