Stocks are the most overvalued in nearly 40 years. Thank the fed.

S

S2007S


Fed liquidity just juicing markets to completely overbought levels.




Stocks are the most overvalued since at least the 1980s based on one measure
PUBLISHED THU, JAN 16 202012:54 PM ESTUPDATED AN HOUR AGO

Maggie Fitzgerald@MKMFITZGERALD




KEY POINTS
  • The price-earnings to growth ratio, commonly called the PEG ratio, sits at its highest level since Bank of America started tracking the data in 1986.
  • “We have pulled forward some of the gains from later this year, and could see some multiple compression,” the firm’s equity and quant strategist Savita Subramanian said in a note to clients Thursday.
  • The current simple price-to-earnings ratio is at 18.4 times, hitting a level the ratio hasn’t seen since 2002.







https://www.cnbc.com/2020/01/16/sto...-at-least-the-1980s-based-on-one-measure.html
 
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S2007S said:
“We have pulled forward some of the gains from later this year, and could see some multiple compression,” the firm’s equity and quant strategist Savita Subramanian said in a note to clients Thursday.
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That's is a big assumption usually seen near market tops.
 
It makes no sense to look at PE ratios in isolation, what matters to allocators is the risk-adjusted return versus alternatives. The equity risk premium today is much higher than it was at the 2000 peak, and depending on the methodology, either similar to or higher than the 2004-08 period. Back in 2000 forward earnings yields were actually lower than T-bond rates.
 
Specterx said:
It makes no sense to look at PE ratios in isolation, what matters to allocators is the risk-adjusted return versus alternatives. The equity risk premium today is much higher than it was at the 2000 peak, and depending on the methodology, either similar to or higher than the 2004-08 period. Back in 2000 forward earnings yields were actually lower than T-bond rates.
More...


it's everything bubble - bonds grow, stocks, grow, RE grows
you don't need to analyze to see what's going on

there is a great article about it in financial times today
 
QE infinity.
ZIRP in the US for a decade.
Negative interest rates in Europe.
Anytime the S&P comes close to its 200 day the Fed members fall over themselves to comfort investors with promises of more free money.

What could possibly go wrong??
 
Clubber Lang said:
QE infinity.
ZIRP in the US for a decade.
Negative interest rates in Europe.
Anytime the S&P comes close to its 200 day the Fed members fall over themselves to comfort investors with promises of more free money.

What could possibly go wrong??
More...


The fed is running out of market saving power. It will interesting to see the market turn down and powell realizing he'll have to defy Trump and let things correct. ZIRP was such a mistake.
 
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