Stock Valuations 3x Higher than Any Point in Human History
If this headline is not true, it is only because I cannot find data on the S&P index prior to the 1920s. Behold a scary chart:
A chart of of the S&P index divided by earnings from 1923 to the present. This chart seems to be a rather good indication that the recent rally in the stock market is the result of people buying a trend rather than anything of underlying value. Prudence seems to dictate that if you have recouped any losses holding index or Dow-performing equities, it’s time to bank those gains before the bottom drops out.
Perhaps even more obnoxious/comical is the forecasting done by Standard & Poors for the P/E ratio through 2011. Either earnings need to sextuple in the next two months or the S&P needs to tank for this to come true. You be the judge:
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