Can any say "Housing Bubble?" Sure you can. Any American stock market investor, like most of the U.S. population has a short memory when it comes to bad things. Past catastrophes and the housing bubble bursting set off a chain reaction of bad things that we as a nation are still trying to dig out from under. We’re an optimistic group, after all, so when it comes to common investment risks, investors may wish to find income producing assets in extremely small niche stocks, rather than the S&P.
everyone to whom I pay attention say we’re headed for a fall, but it
depends on a number of elements to align. Bernanke’s asset bubble, as
far as both he and Janet Yellen are concerned, is that over valuation is
nothing to worry about. Economic easing by printing money has caused
stock prices to rise along with their "value" and corporate bottom
lines. Stock prices, real estate and precious metals all rose in 2012
and most of 2013, with gold and silver in a downward slide these past
few weeks. So moving your money there may not meet your goals.
Jesse Columbo believes strongly about the market valuation beyond
reasonable back in December, 2013, Thomas H. Kee Jr. of Stock Traders
Daily stated just yesterday the swings in the market this past week call
for strict focus, and has been shouting from the roof tops since
November, 2013 , that the stock market is way overvalued. David Kostin
of Goldman Sachs, as late as yesterday said there is no rationality to
the overvaluation of the market.
Warren Buffet, perhaps the
greatest investor in the world – ever, has felt negatively about the
value of the American stock market since November, and his position
hasn't changed as far as I know.
Here’s his take on how to value the markets. In 1999, and again in 2001, in an interview with Carol Loomis of Fortune:
market value of all publicly traded securities as a percentage of the
country's business -- that is, as a percentage of GNP. The ratio has
certain limitations in telling you what you need to know. Still, it is
probably the best single measure of where valuations stand at any given
At a ratio of 70 – 80%, Buffet feels confident the market
is doing fine, but heading nearer to 200% is playing with fire. The
Buffet Ratio is currently standing at 134%. Smell anything smoldering?
one positive person going on record of which I am aware is Kiplinger’s
Anne Kates Smith . The view she sees is continued growth in the market,
leaving he bears wanting.
Simply put, the real answer to the
question is the American stock market overvalued is "it depends on whom
you ask." Let’s face it, people who are in the market have got to be
asking themselves when the ride will end, and nearly no one wants the
uptick to stop ticking up. With that being said, people looking for good investments
should perhaps begin to look somewhere toward individual
under-performing assets. Bubbles burst, don’t they? Don’t let me sway
your opinion. Think about what your goals are and to what level risk
you are willing to sustain. But, if you ask me, the bull can’t run