Should anyone really be surprised that we’ve arrived at this point? For many months, long before Ebola or a slowdown in Europe was on anyone’s mind, many market pundits have been concerned about high stock valuations -- particularly when measured by Yale finance professor Robert Shiller’s cyclically-adjusted price-to-earnings ratio, and the inevitability of the Federal Reserve slowing down its monetary stimulus.
 
Add to that the news of slowing overseas economies in Europe and the Far East, increasing military tensions in Iraq and Syria, and a new fear about the spread of Ebola and its impact on global travel, and it’s small wonder that stocks are in retreat.
 
Writing for the British newspaper, The Telegraph, Allister Heath gives seven reasons why the world’s stock markets are facing a rout right now.
                   
With the exception of Ebola, the items on Heath’s list are hardly late-breaking or out of left field.
As for me, I’m using my left foot to kick my right shin for not acting on some obvious signs and trimming exposure to the S&P 500 and Dow 30 exchange-traded funds in a few retirement accounts I oversee for myself and family members. (Though I don’t believe in broad-brush market timing, I don’t see anything wrong with selling or buying on the margins based on market considerations.)
 
Writing for MarketWatch, columnist David Weidner suggests that much of this selloff was out there for all to see for a while. His tone is a bit sarcastic, which only compounds my personal pain.
                   
“Until the recent selloff, the S&P 500 Index was trading at 20 times price to earnings,” he writes.
 
“The Shiller 10-year adjusted index…has a P/E at 25 times, about the fourth-highest on record. OK, maybe bonds aren’t that attractive. How about cash? Those options look different now, don’t they?”
 
Since many Barron’s readers have a greater-than-average interest in master limited partnerships because of their fat income potential, I thought I’d point out an interesting piece in The Wall Street Journal that discusses the reasons behind the recent rout of the MLP sector.
 
Despite the relative safety of these yield-heavy investments, shares have been falling harder than the broader stock market in recent days. And according to the article, some of that selloff may be based on ignorance on the part of newbie investors who have entered into this market.
 
“On the surface it might seem simple: MLPs are primarily in the business of building and operating natural gas and oil pipelines and storage. And oil prices have collapsed. Ergo, some might think, sell MLPs,” writes Tom Lauricella, a veteran Journal reporter.
 
“That line of thinking is wrong, notes Miller/Howard, an $8.5 billion money manager that specializes in income-producing stocks,” Lauricella writes. “Most energy MLP companies don’t make their money based on the price of oil or gas. Instead, they act more like toll-takers. But that mistaken perception could be driving the selloff, they said.”
 
Miller/Howard does point out that there may also be some forced selling by some mutual funds and hedge funds facing margin calls.
 
Still, the fundamentals broadly for MLPs are fine, the firm told the Journal.