A great measure of the true value of a Stock Market is to take current price and divide by the earnings… not just the P/E of one Stock, but a wide index like like the biggest 500 Stocks— the S&P 500.
This chart alone justifies my pessimism in Stocks going forward. Without a doubt the S&P 500 is in an extreme bubble. This massively overblown U.S. “Stock Bubble” worries me a lot. It’s impossible to justify the P/E ratios of so many Stocks.
Here’s what Fox Business says…
“A sense of euphoria has taken over the stock market as the S&P 500 delivers the “greatest Wall Street rally of all-time,” according to Bank of America.”
Having forecast the Dot Com Bust and the 2008 Mortgage Crisis, The Austin Report has a good track record for seeing bubbles and getting out of the way. This chart is very convincing.
We agree with the more conservative, negative outlook at this moment. We can’t see how Stocks can be anything but a wild, volatile, and risky ride going unto 2021.
Like we’ve said before— we may be living on borrowed money and borrowed time. Bubbles always end in an euphoric wave of last minute investors jumping in and buying when Stocks are expensive and taking the brunt of every unexpected crash.
When we see forecasts of DOW 50,000, we know the wild ride will get worse—soon. Act prudently, protect your life savings, don’t let greed overcome common sense.
And excuse me for being a party pooper.