Tuesday , 19 March 2024

These 2 Stock Market Metrics Make Me Feel Uneasy – What About You? (+2K Views)

It’s been an amazing run in the stock market but…I start to feel a bit uneasy aboutinvesting10 things when I see all news reported as good news, because it either means the economy is getting better or more QE is coming. The fact, though, is that the market is just driving higher on what looks like sheer optimism of continued QE and little else. You can see this optimism in two indicators you’ll recognize.

So writes Cullen Roche (pragcap.com) in edited excerpts from his original article* entitled 2 Charts That Make Me Feel Uneasy About The Stock Market.

[The following article is presented by  Lorimer Wilson, editor of  www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Cullen goes on to say in further edited excerpts:

1. Total Market Cap to GNP

…The latest reading of 110% has only been surpassed by the Nasdaq bubble.

(click to enlarge)

(chart via Orcam Research)

2. Margin Debt

The other chart that makes me feel uneasy is the amount of borrowing that’s being done to purchase equities as evidenced by NYSE margin debt at all-time highs:

(click to enlarge)

(chart via Orcam Research)

Conclusion

I’ll be honest – I’ve never really understood the obsession with equities, and being a macro guy I probably never will, because I have so much love for so many asset classes and approaches.

If I were 100% allocated in equities at this point in the cycle, however, I would feel rather uneasy about my positioning.

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://pragcap.com/2-charts-that-make-me-feel-uneasy-about-the-stock-market (Copyright © 2013 All Rights Reserved)

Related Articles for a Balanced View:

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15. Start Investing In Equities – Your Future Self May Thank You. Here’s Why

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