Fears of a bear market for U.S stock markets came back to the fore Monday with Nobel Prize-winning economist Robert Shiller warning of rock-bottom investor sentiment in his latest research.
The Yale University economist told the Financial Times over the weekend that his confidence surveys were signaling investors were currently at their most fearful of an overvalued market than they have been since the dot-com bubble in 2000.
"It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market," he told the newspaper in an article published Sunday.
However, analysts and strategists have played down talk of overvalued equity markets, despite seven years of ultra-loose monetary policy.
"Absolutely not ... I just don't see it." Michael Gurka, founder and president of BruinHill Partners, told CNBC on Monday when asked whether he thought U.S. stocks were in a bubble.
"I think that if there is a bubble it's so far down the road that we need to see much higher inflated prices to warrant that."
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Gurka is correct.
ReplyDeleteAs long as interest rates stay so low and the Fed and Treasury keep pumping money into the system the stock market will continue to rise. There is no where else for the money to go to earn more money. If interest rates on bonds rise and the money supply tightens then the bubble will burst because the stock market is overvalued by 12-16%.
ReplyDeleteHere we go again with the fear mongering. Oh no! The sky is falling!!
ReplyDelete