Commodity Trade Mantra

Posts Tagged ‘Stock Valuations’

Last 2 Times Equity Valuations Were This High, Result Was A Historic Crash

The current P/E expansion cycle is now one of the largest in history. Although equity valuations are typically highest during periods of low interest rates, the current 18x P/E stands at the upper end of the historical valuation range. During the last 40 years the only instance in which S&P 500 forward P/E exceeded 20x was the Tech Bubble (peak of 24x in December 1999).

Why Goldman Is Suddenly Warning About A "Large Drop" In The Market

After recent bearish conversions by the JPM, BofA, Citi & UBS, the only bank that steadfastly held a bullish view on stocks during the recent market squeeze higher was Goldman Sachs. Not any more. With 80% of fund managers underperforming, the probability of irrational capital allocations increases & as a result there is a reasonably high probability of a large drop in the S&P500.

Will this Manic Stock Market Rally End in Tears?

The stock market is back to where it should be, i.e. in rally mode. Can the stock market completely ignore these changes and keep powering higher on the fumes of Mario Draghi’s promises and another rate cut or three in China? At some point reality will trump fumes, and the manic rally will falter and the mania in stocks will end in tears.

The Fed Is Spooking the Markets, and Not China

The Fed has always known that the fragile economy created through stimulus might prove unable to survive even the most marginal of rate increases. The markets have now panicked that the rate hikes are about to occur in the face of a weakening economy. How much further will markets have to fall before the Fed comes to the rescue by calling off any threatened rate increase?

We're Relying on Phantom Wealth to Fund Our Retirement

That Social Security, Medicare & pension funds invested in stocks & bonds can fund the retirement of 65 million people is a misleading fantasy. Phantom wealth cannot possibly fund unprecedented retirement & healthcare promises. Only real wealth can do that; central bank liquidity & asset bubbles it inflates are not real wealth.

The 4 BIG Signs the Stock Market is Overheating

The stock markets are in a state of ecstasy, but investors may be underestimating lurking danger. CNNMoney took a look at a slew of recent data on stock valuations and corporate sentiment, and while the prospects for global economic growth remain robust, savvy investors need to stay vigilant.

This Chart Shows How Bad The Economy Really Is: “Flashing Red Warning”

Forget about all the minute-by-minute noise for a moment & take a look at this chart. Last year analysts called it a fairly robust growth & cited these numbers as evidence of economic recovery. Wonder what they’d call it now, considering it shows a massive collapse in earnings per share growth across the board.

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