The current market is tough to invest in for both longs and short. While there are overvalued companies, many companies seem to be priced reasonably relative to earnings estimates. The problem is that the economy and credit markets are being artificially propped up by governments and central banks around the World. Without this assistance it is doubtful that earnings prospects would be nearly as high.
As the past decade and economic history has taught us markets and economies will eventually go to where they want to and government tinkering can only work for so long. What would the current economic environment look like if governments and municipalities were not spending well in excess of what is sustainable? What would credit markets look like if governments were not artificially supporting them? How does one evaluate an economically sensitive company or a financial whose book value is highly dependent on credit markets?
For the short side the environment is just as tough. An unsustainable environment based on leverage lasted from 2003 through 2007. Who is to say the same thing could not happen again? What if money printing leads to inflation and the market is down in real terms but not in nominal terms?
I am finding it more and more difficult to find investment ideas and am in hit and run mode. I know it must be frustrating for readers with longer time frames seeing me making the bear case one week and the bull case the next. Unfortunately, it looks like the current environment is here to stay for a while.