Posted on 05/07/2015 3:42:18 AM PDT by expat_panama
Fed chief Janet Yellen rattled the stock market Wednesday when she said "equity market valuations at this point generally are quite high," saying that raises "potential dangers."
She added that she doesn't see "the hallmarks of a bubble," but stocks retreated from opening gains and traded lower, though the major averages closed off intraday lows.
Are stocks overvalued?
After a six-year bull market, a correction should be expected, although the odds favor a more garden variety downturn of 20% or so over a period of several months, not the painful free-falls of 2000-02 or 2008.
Wednesday's selling prompted IBD to lower its outlook to Market In Correction from Rally Under Pressure. Stocks suffered their fourth day of higher-volume selling in the past eight sessions, which historically has led to a lower market.
Aging Bull Market
The S&P 500 and the Nasdaq have gained more than 200% since the bull market began in March 2009. Except for a 2011 correction of barely 20%, the market has treated investors to a smooth recovery that has taken the indexes back to their 2000 all-time highs.
Since 1929, 28 bull markets have lifted the S&P 500 an average of 81% over an average of 729 days, according to the Stock Trader's Almanac.
"I think it's a fact," said economist Ed Yardeni, agreeing with Yellen. "If you look at the forward P-Es for the S&P 500, 400 and 600, they are near historical highs. It's hard to make a case that they can go higher from here."
[snip]
...But Europe and Japan have embarked on their own QE programs, pumping cash into their flagging economies, and Chinese central bankers have been using easy monetary policy to boost their economy.
Measures of valuation, such as price-earnings ratios, have never been good tools for timing the market.
(Excerpt) Read more at news.investors.com ...
Here’s a thought:
Bring back manufacturing to America.
If we made stuff right here, our market wouldn’t be overpriced.
Just saying...
Futures at 3hrs before opening: -0.49% metals and -0.70% stock indexes, this after IBD's switch yesterday to "market in correction". Related: GLOBAL MARKETS-Stocks swept lower as bonds, dollar struggle to steady
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Whoa, there's two of us awake already --neat!
I'm still on my first coffee so pse help me out here. What I'm getting is something like the reason too many folks are buying stocks in American factories is because American factories don't make anything. That can't be what you're saying...
End the Fed.
Define the Dollar as 1/20th of an oz. of gold. (Announce a deadline one year in the future, and allow the current dollar to find the proper exchange rate with the new dollar.)
Abolish fractional-reserve lending.
All problems solved.
People are buying stocks in American companies, which are making stuff in China.
This thing is, Chinese investors have a majority of every company in China. It is the law. Foreigners cannot own companies in China, only 49%.
So American companies sent manufacturing to China, only own 49% of the companies there, and all the jobs are done by Chinese. Yet nobody is saying this is a wrong-headed approach. Both parties are now completely sold out in this regard.
So this means eventually, we will be overcome by China.
Time to bring industry back to America.
Does that help to explain things?
Will she let us know when to get back in?
that would crash the market because companies would fail because their prices are too high
Bear Market:
A prolonged period in which investment prices fall, accompanied by widespread pessimism. If the period of falling stock prices is short and immediately follows a period of rising stock prices, it is instead called a correction. Bear markets usually occur when the economy is in a recession and unemployment is high, or when inflation is rising quickly. The most famous bear market in U.S. history was the Great Depression of the 1930s. The term “bear” has been used in a financial context since at least the early 18th century. While its origins are unclear, the term may have originated from traders who sold bear skins with the expectations that prices would fall in the future. opposite of bull market.
Yet, during the last 8 years the market has been bullish, how?
>> not the painful free-falls of 2000-02 or 2008
I remember fondly the painful free fall of 2008.
I bought some stocks in good US companies that throw off a 3% dividend, that have doubled (or more) in share price since then.
I occasionally kick myself that I was a bit cautious and didn’t buy even MORE.
Maybe she already has, just checked and stock index futures are now positive.
"never mind" --Janet Yellen
LOL
Flood the market with quantitative easing and then say things look damp, water is wet etc...
Huh, so each dollar of my savings would suddenly be worth $59. Neat!! Of course at the same time folks selling stuff would probably lower prices also by a factor of 59 --same w/ wages. It'd put us all in a much lower income tax bracket...
qe stopped last october.
stock growth has been relatively anemic since beginning of the year.
yellen warning ready for bear market now would be just plain cruel to small investors.
imho stocks won’t continue to rise until another (unannounced) fed qe.
i think yellen might be doing the fed equivalent of a head fake.
basically, tell everyone that they will zig, give politically well connected fat cat insiders a tip that they zag, and then zag.
imho, stocks will take off again once qe is restarted. people want stocks to take off again. the real profit makers are (difficult to imagine otherwise) political fat cat contrarian insiders with connections inside the DC beltway and inside the fed.
full disclosure, i am somewhat of a pessimist on the human condition in general. i am here just applying that to recent yellen-speak.
“Here’s a thought:
Bring back manufacturing to America.”
True. Unfortunately Obama is negotiating several big trade deals in private and the Republicans seem ready to give him fast track authority. Why are the terms so secretive? Once the new Asian deal is done, millions more American jobs will be outsourced.
What trade deal in the past 30 years has been good for American workers? None. If these deals were good for Americans, there would be plenty of studies showing the positive effects on employment and the economy. In addition the politicians would be trumpeting the studies.
I can see the evidence with my own eyes. Closed factories, shrinking middle class, lack of opportunity for young people.
Why are the politicians of both parties about to do another big trade deal with Asia and one with the EU, cheered on by the Chamber of Commerce. Follow the money and It won’t be flowing to the middle class or the poor.
That is happening, here's what we had 7 years ago:
So what I'm getting from you is that this is a bad thing. There've also been Chinese companies building factories in the U.S:
My guess is you don't like that either and it has nothing to do with jobs or production.
Yellen had no business making that statement.
An amateur, prideful statement to tell everyone how smart she is.
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