Is the Stock Market Cheap? | AgainstCronyCapitalism.org
Professor Jeremy Siegel thinks it is.
His most recent call is that the stock market as a whole is selling for 10-15% less than it should. Fed chairman Janet Yellen in recent testimony didn’t say it was cheap, but she thought it wasn’t very expensive either.
Are they right?
Consider this. If you compare the price to the corporate earnings, as Yellen said she did, the market doesn’t seem so expensive. But this ignores an inconvenient fact: corporate earnings are at all time highs. And historically when earnings have soared like this, they don’t stay so high. They fall, or as the experts say, they “mean revert.”
And why are corporate earnings so high? One reason is that the government’s deficit spending seems to be flowing right into corporate profits. It may not be helping the average person, but it is definitely helping corporate America. Another reason is that the Fed’s funny money policies are making Wall St. and finance companies in general richer and richer. And don’t forget that many companies you don’t think of as being in finance really are. That’s why General Electric, the oldest and bluest of blue chip companies, would have gone bust in 2008 but for a government bail-out. Its finance divisions were the source of the problem.
By the most sophisticated measures, the stock market is not as expensive as it got at the end of the dot com bubble, prior to the crash of 2000. But it is high enough to be considered in bubble territory.
From Advisor Perspectives.
View the original here:
Is the Stock Market Cheap? | AgainstCronyCapitalism.org
See which stocks are being affected by Social Media
