Posted on 01/28/2013 4:35:16 PM PST by PieterCasparzen
With corporate profits at record levels and stocks regaining the ground lost during the financial crisis, Wall Street anxiously anticipates the return of the individual investors to equity markets. It may be a long wait, because the little guy may have concluded stocks are a sucker’s bet.
Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.
In March 2000, the S&P 500 first closed above 1500. Since corporate profits are up 135 percent but stocks have made virtually no gain since over the last thirteen years.
Buying stocks does not seem to pay any more, because most of the increased value created by higher profits has been captured by hedge funds, electronic traders, private equity funds, aggressive M&A shops, and trading desks at investment banks, which have multiplied over the last two decades.
(Excerpt) Read more at foxnews.com ...
You do realize that every previous “all-time high” has since been superseded?
P/E ratios are getting a bit pricey—around 16-18, depending on which index you’re looking at. That’s a bit higher than the historical average, but it’s nowhere near 40 or 400, as we’ve seen in previous bubbles.
I doubt I would get all in now if I were in cash, but I don’t think it’s time to head for the hills, either.
Small Caps are overpriced. The P/E of the Russell 2000 is around 36.
Stocks are almost worth what they were years ago, a bad long term investment. The stock market is straight up gambling.
I read not too long ago that 85% of ALL TRADES are between the 5 or so Too big to fail banks, there is very little with regards to the General Public or other institutions, which tells me it is a suckers game and they have been artificially pumping the market in an effort to Sucker the Public back in, so they can FLEECE US AGAIN.
I agree R2000, it is a game of what the perception is rather than reality.
Also, many are forced into places like the stock market because government keeps interest rates for bank accounts near zero so the interest on the national debt is less.
There is so much manipulation that unless you are in a rare crowd doing all the manipulating you are at risk of maybe losing it all.
Are stocks a sucker’s bet?
No VOTING is...... i.e. massive voter fraud..
Are stocks a sucker’s bet?
No VOTING is...... i.e. massive voter fraud..
Oh, I understand plenty. Some don’t seem to understand the present/future effects of capital expansion vs credit expansion and which one has been occurring during the last 20+ years.
That’s high level stuff alright - so I’m right - you understand futures :) That said, I’m also concerned about credit expansion - creates waaaaay too much funny money.
Well yes, I would expect that in a normal world.
But in this economic climate? With this administration?
People I talk to can't explain why we're doing even this well right now, much less marching to new highs.
Corporations earnings are at an all-time high (in dollar value). That’s why the market is doing well at the moment.
Now, the question can be asked: why are corporations’ earnings so high? Is any of it due to government bailouts, stimulus, loans, etc? Some of it, yes. Much of it because the companies are still running very lean labor-wise and productivity is way,way up. They have learned to make do with much less. That leads to profits. Also, many of the MNC’s are making and selling products overseas.
The economy IS growing—very slowly, despite Obama’s best efforts to kill it. Of course, most of his Obamacare provisions have yet to go into effect, so we’ll have to see.
-——Buying stocks does not seem to pay any more, because most of the increased value created by higher profits has been captured by hedge funds, electronic traders, private equity funds, aggressive M&A shops, and trading desks at investment banks, which have multiplied over the last two decades.-——
That is a wordy sentence of hedged nonsense. One wonders if the Maryland professor took some days off to be part of OWS.
stocks are propped up by tax payer bailouts, and stimulus to keep large banks from failing causing the feds to print monies that inflate our dollars causing more of them to be needed to buy the stocks of which they are selling to increase the market which they say is an indicator of a robust economy...
we are through the looking glass and here’s the reality...
milk has risen from 1.19 a gallon to 3.89 a gallon.
is it a good time to buy? either way, someone getting some teat.
teeman
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