The world's stock markets suddenly look wobbly.
So it seems a good time to remind everyone that, if stocks suddenly crash, say, 30%-50%, it should not come as a surprise.
Why?
Because based on valuation measures that have been valid for the past ~130 years, stocks are at least that overvalued.
True, many people believe "it's different this time" — that the world has changed and that historical valuation measures are no longer meaningful.
Let's hope so.
Regardless, I have become increasingly worried about the level of stock prices over the last couple of years.
So far, this concern has made me sound like Chicken Little. And, from a personal finance and business perspective, I hope it will continue to do so. (I own stocks, and I'm not selling them. I also run a business, and it's easier to run a business when everyone is feeling happy and optimistic and rich.)
But my concern has not diminished.
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2 comments:
By doing this , won't it give
hackers a much easier route to
using these people in Medicare
Fraud.
I , for one, don't want my records "there"
The stock market is so over valued because we are giving banks $1 Trillion per year for their junk assets. We're supposedly holding on the hook to the private Federal Reserve for these underperforming financial instruments.
Meanwhile, nobody wants the poor, below inflation returns that are available in the US Treasuries market. It's an artificial rate, because most of the debt is actually purchased by the private Federal Reserve.
When a better opportunity than the stock market comes about, we'll see a huge crash as money rotates out. Something else will become the asset bubble.
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