When will the stock bubble burst?

[JakeStarkey]

culturecitizen, you are in error.

 

[Hedgology]

There is currently no stock market bubble…

Any links to support your claim ?

There is a simple definition of what constitutes a stock/stock market bubble, which entails the demand for stocks have driven stock prices higher, and there is no reasonable correlation between current stock prices and their long-term valuations.

Stocks are expensive, but there isn't a bubble.

Ah , I guess such a comment comming from someone whose avatar is named hedge-ology should be taken with a grain of salt.
Indeed, stock prices are a lot higher than their valuation, so , it is a bubble.

Stock Market Capitalization To GDP Ratio Definition | Investopedia

Market capitalization to GDP ratio is not a valuation metric one would use to determining a bubble (At least, not a metric one would use if that person wanted to be taken seriously), because that metric is often interpreted poorly. That metric is best used to determine if the market is oversold/overbought. All your chart shows is that stocks are more expensive than recent years, not that a bubble is occurring.

And I guess that is where your confusion lies because a stock market bubble isn't inflation; it isn't when stocks are "expensive;" it isn't when indices reach new milestones, and you don't understand way. Again, a stock market bubble is when demand for stocks has driven stock prices higher, and there is no rational correlation between stock prices and their long-term valuations.

For example, the PE ratio of the S&P 500 is estimated to be around 19x. That's currently its long-term average. In 2000, PE for large cap growth stocks was 32x and the NASDAQ was around 100x. That's a bubble. What is going on in the stock market isn't anywhere similiar (unless you're looking at biotech or fixed income).

 

[EdwardBaiamonte]

There is currently no stock market bubble…

Any links to support your claim ?

There is a simple definition of what constitutes a stock/stock market bubble, which entails the demand for stocks have driven stock prices higher, and there is no reasonable correlation between current stock prices and their long-term valuations.

Stocks are expensive, but there isn't a bubble.

Ah , I guess such a comment comming from someone whose avatar is named hedge-ology should be taken with a grain of salt.
Indeed, stock prices are a lot higher than their valuation, so , it is a bubble.

Stock Market Capitalization To GDP Ratio Definition | Investopedia

Market capitalization to GDP ratio is not a valuation metric one would use to determining a bubble (At least, not a metric one would use if that person wanted to be taken seriously), because that metric is often interpreted poorly. That metric is best used to determine if the market is oversold/overbought. All your chart shows is that stocks are more expensive than recent years, not that a bubble is occurring.

And I guess that is where your confusion lies because a stock market bubble isn't inflation; it isn't when stocks are "expensive;" it isn't when indices reach new milestones, and you don't understand way. Again, a stock market bubble is when demand for stocks has driven stock prices higher, and there is no rational correlation between stock prices and their long-term valuations.

For example, the PE ratio of the S&P 500 is estimated to be around 19x. That's currently its long-term average. In 2000, PE for large cap growth stocks was 32x and the NASDAQ was around 100x. That's a bubble. What is going on in the stock market isn't anywhere similiar (unless you're looking at biotech or fixed income).

Don't worry culture creep is not to be taken seriously. I'm sure he's not selling his assets (not that he has any) to short the markets he claims are bubbled up.

 

[JakeStarkey]

There is currently no stock market bubble…

Any links to support your claim ?

There is a simple definition of what constitutes a stock/stock market bubble, which entails the demand for stocks have driven stock prices higher, and there is no reasonable correlation between current stock prices and their long-term valuations.

Stocks are expensive, but there isn't a bubble.

Ah , I guess such a comment comming from someone whose avatar is named hedge-ology should be taken with a grain of salt.
Indeed, stock prices are a lot higher than their valuation, so , it is a bubble.

Stock Market Capitalization To GDP Ratio Definition | Investopedia

Market capitalization to GDP ratio is not a valuation metric one would use to determining a bubble (At least, not a metric one would use if that person wanted to be taken seriously), because that metric is often interpreted poorly. That metric is best used to determine if the market is oversold/overbought. All your chart shows is that stocks are more expensive than recent years, not that a bubble is occurring.

And I guess that is where your confusion lies because a stock market bubble isn't inflation; it isn't when stocks are "expensive;" it isn't when indices reach new milestones, and you don't understand way. Again, a stock market bubble is when demand for stocks has driven stock prices higher, and there is no rational correlation between stock prices and their long-term valuations.

For example, the PE ratio of the S&P 500 is estimated to be around 19x. That's currently its long-term average. In 2000, PE for large cap growth stocks was 32x and the NASDAQ was around 100x. That's a bubble. What is going on in the stock market isn't anywhere similiar (unless you're looking at biotech or fixed income).

Don't worry culture creep is not to be taken seriously. I'm sure he's not selling his assets (not that he has any) to short the markets he claims are bubbled up.

Edward, quit pretending you are an economist. You don't even a B. S. in the subject. Well actually you do have a lot of bs about it.

 

[skookerasbil]

Anybody see the Baltic Dry Index on Monday?? Canada currency collapse in full swing!!! Oil collapsing ( only progressives think this is awesome news!! )

And this today............ Q4 Will Be The Worst U.S. Earnings Season Since The Third Quarter Of 2009 | Zero Hedge





munch..........munch..........

 

[skookerasbil]

Oh....and JP Morgan has purchased 9 million ounces of silver in recent weeks!!

 

[skookerasbil]

We're badly, badly overdue for a nice, big correction.

I'd love to see 18% to 20%, but don't be surprised to see 25% to 28%. This has taken too long.

The Fed's actions were irrelevant. Yields are down, and there are at LEAST as many deflationary pressures at this moment than inflationary pressures.
.

Indeed...........

Canadians Panic As Food Prices Soar On Collapsing Currency | Zero Hedge

 

[skookerasbil]

This is huge.............

Baltic Dry Index Falls Under 400 For First Time Ever, Demand Recovery Could Now Be As Far Out as 2018


lmao.......basically, right now there are like 3 ships moving between Europe and the US!!!

 

[skookerasbil]

munch...........munch............

 

[Indeependent]

What WILL the old farts who LOVE cheap labor and unemployed Americans DO?

 

[CultureCitizen]

And I guess that is where your confusion lies because a stock market bubble isn't inflation; it isn't when stocks are "expensive;" it isn't when indices reach new milestones, and you don't understand way. Again, a stock market bubble is when demand for stocks has driven stock prices higher, and there is no rational correlation between stock prices and their long-term valuations.

I didn't say it was inflation. Those are your words.
But let's say the revenues of the public companies rise by 1%, and then the stocks rise by 10%, and the same happens the next year , and the next. So there is a very dim correlation between the actual performance of the companies and the stock valuations. The fact that the stocks are growing much more faster than the economy is the sign of a bubble, not that they are "expensive" , again those are your words, so stop putting words in my mouth .


...now tell me : do you se a pattern here ? Just coincidence?

 

[CultureCitizen]

culturecitizen, you are in error.

Ok, look at the chart below.
There is little correlation between the gdp growth ( the actual output of companies) and stock value.
In seven years it has gone from 0.9 to 1.8. At least three times since 1970 a ratio above 1.2 has produced a crash.
What is different this time ? QE 4? 0.25% interest rates? Granted maybe the stock bubble will not burst, and somehow manages to stabilize in a plateau, but it won't be at its current price level.

 

[CultureCitizen]

For example, the PE ratio of the S&P 500 is estimated to be around 19x. That's currently its long-term average. In 2000, PE for large cap growth stocks was 32x and the NASDAQ was around 100x. That's a bubble. What is going on in the stock market isn't anywhere similiar (unless you're looking at biotech or fixed income).

I personally think a ratio above 22 is in bubble territory ( yep 38 is a mega bubble). Now it might not burst, because interest rates are being kept low. But that is not the only factor, if any other investment becomes equally profitable and more secure , the money will flow there ( I can think of saudi aramco going public ) .

 

[Hedgology]

And I guess that is where your confusion lies because a stock market bubble isn't inflation; it isn't when stocks are "expensive;" it isn't when indices reach new milestones, and you don't understand way. Again, a stock market bubble is when demand for stocks has driven stock prices higher, and there is no rational correlation between stock prices and their long-term valuations.

I didn't say it was inflation. Those are your words.
But let's say the revenues of the public companies rise by 1%, and then the stocks rise by 10%, and the same happens the next year , and the next. So there is a very dim correlation between the actual performance of the companies and the stock valuations.

You're not using the words inflation, but you are clearly confusing the terms. Stocks, especially growth stocks, tend to be volatile with a substantial change in price with a change in expectations or actual earnings performance relative to expected performance occurs. Even if the earnings are meager, if stock prices rise faster than normal, it means street consensus was better than expected. That is normal. That is what we call an earnings surprise.

This, however, is NOT what occurred during the NASDAQ bubble in the late 90s. Stocks increased dramatically in price, despite never making a single profit at all.

Stock prices are a reflection of future earnings. If they can't accurately reflect future earnings, then the stocks are extremely overvalue, which means they could currently be experiencing a bubble.

The fact that the stocks are growing much more faster than the economy is the sign of a bubble, not that they are "expensive" , again those are your words, so stop putting words in my mouth .

No, those aren't my words. I don't know how many times I can explain what a bubble is, but it's not when stocks prices are growing faster than economic growth.

Using that definition, there will always be a bubble, even during recessions. At this point, I don't know if you understand the metrics you are attempting to use.

...now tell me : do you se a pattern here ? Just coincidence?

This tells me nothing. Stock valuations aren't anywhere near the levels they were during the NASDAQ bubble. You're reaching.

 

[CultureCitizen]

This tells me nothing. Stock valuations aren't anywhere near the levels they were during the NASDAQ bubble. You're reaching.

No , but they are higher than the two previous bubbles: 1973 and 2008.

 

[Hedgology]

This tells me nothing. Stock valuations aren't anywhere near the levels they were during the NASDAQ bubble. You're reaching.

No , but they are higher than the two previous bubbles: 1973 and 2008.

There was no stock market bubble in 2008. That was a housing bubble. There definitely wasn't any stock market bubble I recall in the 1970s.

 

[CultureCitizen]

This tells me nothing. Stock valuations aren't anywhere near the levels they were during the NASDAQ bubble. You're reaching.

No , but they are higher than the two previous bubbles: 1973 and 2008.

There was no stock market bubble in 2008. That was a housing bubble. There definitely wasn't any stock market bubble I recall in the 1970s.

You are probably too young :

1973–74 stock market crash - Wikipedia, the free encyclopedia

 

[Agit8r]

not until after the election

the fed will spend our money to keep it going at least until then

if a rep wins, it will fall apart the next Q
if a dem wins the debt will skyrocket to keep it afloat

What are you talking about? The Federal Reserve? Or the federal government?

 

[Hedgology]

This tells me nothing. Stock valuations aren't anywhere near the levels they were during the NASDAQ bubble. You're reaching.

No , but they are higher than the two previous bubbles: 1973 and 2008.

There was no stock market bubble in 2008. That was a housing bubble. There definitely wasn't any stock market bubble I recall in the 1970s.

You are probably too young :

1973–74 stock market crash - Wikipedia, the free encyclopedia

At this point, I'm certain you'll never understand what a stock market bubble is…

 

[westwall]

It seems to be a bit inflated, and now that the fed has risen rates, it has set the conditions for it to burst.

You're only NOW figuring this out?