"Stocks are Partying Like It’s 1929, 2000 and 2007"
Taking a look at four measures of market value, all at historically high levels
Jan 8, 2015 by Daniel Crosby (See also the Dec. 27 post; there seems to be a lot of agreement that stocks are overpriced. This is NOT a prediction of the future but a reminder to rebalance and consider one's asset allocation and exposure to stocks). The bull market is over 5 years old (that's ancient). Crosby writes: "I find the market significantly overvalued and think that some sort of defensive measures will be wise for most investors in the year(s) to come." Crosby reviews 4 measure of stock valuations and explains: what it is, what it says, and what it means.
1. Shiller Cyclically Adjusted Price to Earnings Ratio (CAPE).
2. S&P 500 Price to Earnings Ratio
3. Wilshire 5000/GDP – aka, “Buffett Valuation Indicator”
4. Crosby Irrationality Index
If you are a long way from retirement- no worries. "But for those nearing retirement, an unambiguous picture seems to be emerging that returns for the next 8 to 10 years are likely to be depressed in light of the eye-popping returns of the more recent past. Do not act in haste or deviate from your plan if one is in place, but please accept this gentle warning from a concerned party who knows that 'this time is never different.'"
Stocks likely overvalued; time to reblance
Reviewed by Pisstol Aer
Published :
Rating : 4.5
Published :
Rating : 4.5