Monday, April 11, 2011

Equity Valuations Forming Second Biggest Bubble in US History

Despite the terrible economic performance of the past ten years (both in terms of the markets and the general economy), equity valuations are now approaching the second largest bubble in United States history, surpassed only by the technology bubble. Both the cause and the potential ramifications of this development are astounding.

Exhibit one: The cyclically-adjusted price-to-earnings ratio, or CAPE. This is not a “fad” valuation metric.  CAPE dates back to 1871, offering 140 years worth of data, during which time the mean price-to-earnings ratio is 16. According to Yale University’s Dr. Robert Shiller, the market is now 41% overvalued according to this valuation metric. The only time the markets have been more overvalued was a few brief months in 1929 and the tech bubble.


  1. I honestly do not understand how investors continue to faithfully invest their finances into a corrupted and broken vehicle like the stock market.

    Not a thing has changed since the last massive crash, with the exception of trillions of falsely manufactured dollars.

    The public citizen, private business and
    virtually all levels of government are swamped with unpayable debt.

    What is occurring is an inflationary depression. After the inflation subsides a massive contraction of fiscal policy will eventually manifest itself.

    We would all be well advised to invest the dollars we have into tangible physical assets.


  2. most people threw unoins and 401 ks are locked into stock market they take thier money out.
    40 percent tax if under 56 30 percent if over 56.

    my point with these numbers the stock market is 40 percent over valued because that money goes back to fed.
    also you have no choice but to be on the ponzi scheme
    it is a good idea when in 1980 the market was at 800 points
    but at 12000
    gold 3000 is cheap but when you talk to people they call you crazy.
    because then that means thier screwed because thier 401 k will be worth less .
    at dow 3000
    and today its at 12000 . so you are crazy!!
    i say he who laughs first will not be laughing last.
    when they find out thier screwed it will be to late.
    thier are NO jobs game is over


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