We estimate that a 'fair price' for the market is a Shiller PE of around 16. With the market at close to a Shiller PE of 26, the market is overvalued by about 60%. Now is not a historically good time to initiate a position in the S&P500.Read More »
We have been in the throes of a secular bear market, subject to strong cyclical swings in either direction, since 2000. Currently, based on the 5 leading investment indicators analyzed in this article, the measures all confirm that, from a longer-term perspective, the market remains overvalued. Let's take a look at each to see why that is the case.Read More »
What Does Current Global Crisis Comparison with Those of '08 and '10 Mean for Stocks, Bonds, Currencies and Commodities?
How does the current behavior of the global financial markets compare with the two recent crises, namely the great financial crisis of 2008/2009 and the minor one in 2010 when the sovereign debt crisis in the eurozone developed? [I have analyzed 15 aspects of the markets and have concluded that over the next 2/3 months we should see, among other things, increased volatility, declining S&P 500 and MSCI World indices, a bottoming in the 10-year U.S. Treasuries yield, renewed U.S. dollar weakness, renewed strength in the price of gold and silver with silver outperforming that of gold. Take a look at the 19 charts below to see for yourself.] Words: 825Read More »
The Cyclically Adjusted Price Earnings Ratio, abbreviated as CAPE, or the more precise P/E10, closely tracks the real (inflation-adjusted) price of the S&P Composite. After dropping to 13.3 in March 2009, the P/E10 has rebounded to 23.0. The historical average is 16.39 raising concerns about the current price level of the S&P Composite. Let me explain. Words: 1298Read More »