The Fed needs to start raising rates!

[Martinghoul]

I'm just curious about something that I am sure will attract some ire... However, being a devil's advocate can sometimes be enlightening.

What objective measure/model do you guys have that indicates that stocks are significantly in bubble territory at the moment?

 

[Martinghoul]

Quote from nazzdack:

The Fed won't do anything until the front-month, fed funds futures contracts trade below 99.50. Until then, relax.

Huh? This makes no sense whatsoever...

 

[morganist]

Quote from Martinghoul:

I'm just curious about something that I am sure will attract some ire... However, being a devil's advocate can sometimes be enlightening.

What objective measure/model do you guys have that indicates that stocks are significantly in bubble territory at the moment?

today the london stock market had the record rise for a quarter. it was something like 21% rise. whether that is a bubble or not it indicates the price has risen at a record level over a short period of time.

 

[nazzdack]

Quote from Martinghoul:
What objective measure/model do you guys have that indicates that stocks are significantly in bubble territory at the moment?

1) Extreme bullish sentiment
2) Low dividend yields
3) High P/E multiples based on inflated/manipulated/bogus earnings numbers
4) On a decade-by-decade basis, the year ending in "9" or "0" marks a transition to recession.

 

[nazzdack]

Quote from Martinghoul:
Huh? This makes no sense whatsoever...

It makes all of the sense in the world. I believe that The Fed "follows" the market. You appear to believe that The Fed "controls" the market.

 

[Martinghoul]

Quote from nazzdack:

It makes all of the sense in the world. I believe that The Fed "follows" the market. You appear to believe that The Fed "controls" the market.

In this particular case, I believe you're wrong and I'm right.

 

[morganist]

Quote from Martinghoul:

In this particular case, I believe you're wrong and I'm right.

what about the record rise in stock that would indicate a bubble or something unusual at least.

 

[Martinghoul]

Quote from nazzdack:

1) Extreme bullish sentiment
2) Low dividend yields
3) High P/E multiples based on inflated/manipulated/bogus earnings numbers
4) On a decade-by-decade basis, the year ending in "9" or "0" marks a transition to recession.

Surely you'll have to agree that not one of these criteria is objective. I don't even have to address each point specifically, it's so obvious.

Quote from morganist:

today the london stock market had the record rise for a quarter. it was something like 21% rise. whether that is a bubble or not it indicates the price has risen at a record level over a short period of time.

Well, I fail to see how a rise or fall of a certain magnitude can be objectively used to determine bubbles. Specifically, what would this criterion suggest if you were to apply it to the stock mkt's performance in 2008?

 

[Daal]

Quote from Kicking:


2) it's clear that if they wait for inflation to show up in CPI , crude could be past $100 again

How did the inflation bulls in 2008 ranked agains the Fed in terms of forecasting?The Fed was right inflation was going to 'moderate' and the $147 oil hyperinflationists were wrong(Including me). Just tell me where all this inflation will come from given that wages(UR rising), credit(Net bank credit down), rents(going down in some cases) are all underpressure as is the money supply(M2). The Fed cant do nothing about oil as they dont own rigs

 

[morganist]

Quote from Martinghoul:

Surely you'll have to agree that not one of these criteria is objective. I don't even have to address each point specifically, it's so obvious.

Well, I fail to see how a rise or fall of a certain magnitude can be objectively used to determine bubbles. Specifically, what would this criterion suggest if you were to apply it to the stock mkt's performance in 2008?

i agree with you first point. in relation to the criteria as objective.

your second point to a degree yes you are correct it is not definitive proof of a bubble but it is evidential something is abnormal if it is breaking records, what it is a matter for debate. perhaps people view stocks a better investment (on a personal level) due to low return from other areas.