Jacob's latest post/Gold question

[Mike Crosby]

Jacob on buying his house had this to say:

"With an aggregate P/S of 1.2, I believe US markets have become substantially overvalued and with no QE to inflate prices further, I wanted to reduce my exposure."

I'm an index fund kind of guy and most of my indexes are in the stock market. People a lot smarter then me say just hold tight or rebalance while others who I respect say it's a good idea to buy gold at this time. And I'm definitely leaning to buying precious metals.

Not sure if this is my first post here or not, but I wanted to get this forum's opinion. Thank you.

[IlliniDave]

I don't know that gold is particularly cheap either.

I'm an indexer too. I don't do it myself, but some people will argue that a little bit of gold is a good diversifier. I'm holding with my US stocks (I won't pare back until PE hits 30, and then probably just a little, 10% or so). I'm buying emerging marks and ex-US stocks which are cheaper, and a small amount of bonds in the spirit of diversity and to add some ballast.

That said, I'm looking at purchasing some lakefront property in NE Minnesota, which might cause me to sell some assets, and first on the list would be US stocks (although I wouldn't sell out completely).

[Marius]

I have a very basic question about the same quote: "With an aggregate P/S of 1.2, I believe US markets have become substantially overvalued and with no QE to inflate prices further, I wanted to reduce my exposure."

What exactly do you mean by P/S (price per share? price to sales ratio? something else?) and how do you obtain this number for "US markets"?

[ohcanada]

Price to sales.