Wednesday, May 18, 2022

Is the stock market overvalued?

 


Shiller's CAPE (Cyclically Adjusted Price/Earnings ratio) and the WSJ, This Could Be a Lost Decade for Stocks, suggest that it may be:

The recent selloff could be the early stages of that adjustment, though, according to Christopher Bloomstran, a value-investing veteran who is president of Semper Augustus. He wrote in an email interview that tightening monetary policy is likely to be the catalyst.
“The Fed has a perfect record popping bubbles. They aren’t likely to fail this time,” Mr. Bloomstran wrote.
Another prominent value investor, Jeremy Grantham, co-founder of the asset manager GMO, wrote in January that U.S. stocks had entered their fourth “superbubble” of the past 100 years and that he expected them to drop by half. In addition to quantitative reasons such as statistical deviation from long-term trends, he cited a more subjective historical cue akin to ringing a bell near the top—“crazy” speculation, this time in meme stocks, EV makers, cryptocurrencies and NFTs.

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    The recent selloff could be the early stages of that adjustment, though, according to Christopher Bloomstran, a value-investing veteran who is president of Semper Augustus. He wrote in an email interview that tightening monetary policy is likely to be the catalyst.
    “The Fed has a perfect record popping bubbles. They aren’t likely to fail this time,” Mr. Bloomstran wrote

    ReplyDelete