Posted on 09/14/2015 7:47:30 AM PDT by SkyPilot
A growing number of investors believe that US stocks are overvalued, creating the risk of a significant bear market, according to research by Yale University market scholar Robert Shiller.
The Nobel economics laureate told the Financial Times that his valuation confidence indices, based on investor surveys, showed greater fear that the market was overvalued than at any time since the peak of the dotcom bubble in 2000.
Nobel economics laureate Robert Shiller
“It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market,” he said.
However, he made clear that it remained impossible to time any fall in the market, and cast doubt on whether stocks would drop should the Federal Reserve raise rates later this week.
“I’m not looking for any big effect,” he said. “It’s been talked about for so long, everyone knows that it’s coming. It’s just not much of a big deal.”
Prof Shiller added there was no historical evidence for a link between interest rates and share prices. “You would think that when interest rates are higher people would sell stocks, but the financial world just isn’t that simple.”
(Excerpt) Read more at ft.com ...
Get ready folks.
Stocks could drop 30 - 40% if the Fed raises interest rates even a very small percentage.
US interest rate rise could trigger global debt crisis
This would essentially be a doubling of the interest rate for the "free money" gang, and it would signal to the money gamblers and Central Bank teat suckers that the gravy train is over.
Been reading this headline, with variations, for 50+ years.
It is not 1965, 1975, or any other year.
2015 may prove to be explosive and life changing, and not in good way.
If it doesn't, it doesn't - but I am not so sure.
Well sure. Could happen. But even in recent history we’ve been hearing this almost every quarter. By this point, with it never happening, well ... it’s just a boy who cried wolf thing.
Time will tell indeed. ; )
Been reading this headline, with variations, for 50+ years.
I believe it is coming soon again and this time all of the backstops are used up.
The 0s have all been turned to 1s already.
I’m thinking the next crash will cause the Dow Jones to lose about 10,000 points, possibly more. You heard it here first from The Hydrazine!
I have heard 40% from several economists. It could be more as you said. Here is a point. In 2009 the stock market was around 6800. Does anyone really believe the world economy is stronger in 2015?
I did, but that wasn’t a mega collapse like so many predict. I don’t dismiss most anything out of hand without research, but these always strike me as, and mostly turnout to be, snake oil.
Look at the progression of the drops in the Dow Jones in 2002 and 2008.
That’s the problem. How do you invest in a market completely divorced from economic reality?
The Nobel economics laureate told the Financial Times that his valuation confidence indices, based on investor surveys, showed greater fear that the market was overvalued than at any time since the peak of the dotcom bubble in 2000.
...
Bear markets don’t happen until the Federal Reserve says so with interest rate hikes. They haven’t even begun yet, and the market usually doesn’t tank until they’ve done multiplle hikes and inverted the yield curve.
Prof Shiller added there was no historical evidence for a link between interest rates and share prices. “You would think that when interest rates are higher people would sell stocks, but the financial world just isn’t that simple.”
...
What matters is how artificially high the Fed raises rates compared to what the market rate should be. The absolute value of the interest rate doesn’t matter as much.
When the yield curve gets inverted the financial system starts to lock up.
>>Been reading this headline, with variations, for 50+ years<<
Heck, 50 years? All ya gotta do is go back every 7, then 7 from there to see major corrections.
That is the problem Sam. You nailed it.
Because of Central Bank manipulation, there is no longer any price discovery in the markets. That means that we really don't have "free" markets. This is where it gets weird: one could argue that the United States doesn't even have a real functioning economy anymore. It is dependent on debt, imaginary "cash", and Central Bank smoke and mirrors.
Exclusive: Deutsche Bank to cut workforce by a quarter - sources
“How do you invest in a market completely divorced from economic reality?”
In one of Trump recent interviews, he said the exact same thing. Kind of surprised me that he would admit that. But he is Trump.
“It is dependent on debt, imaginary “cash”, and Central Bank smoke and mirrors.”
And that means that whenever those who are doing the manipulations are ready to do so, they will either let go of it all and see what happens and it won’t be pretty,
or they will stop the manipulations that are only meant to buy time until they’re ready to pull the trigger of self-interested gains.
It’s like when a farmer has an animal to slaughter, a chicken, for example, he strokes it as if kindly until the very second he is ready to strike the “chicken’s” head off.
And even though the stroke has never ever happened before to the chicken, it will happen and it CAN only happen once.
THINK ABOUT THIS.
Then turn to God’s mother, Mary and pray for God’s mercy and repent of all wayward behavior and GET ready to meet your Maker.
Not what's good for the country, rather what is good and prudent for the party.
Regular ol working folks trying to save for retirement always get hammered when the gubbamint/not so federal reserves manipulation finally boils to a head and can be covered up any longer.
Baloney. In which market are you unable to discover the price? Maybe I can help?
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