Bubble? No... It’s Different This Time
The stock market continued its rise to greatness today, with all major indexes hitting all-time records. With each passing day more investors are converted into believers that this is an unstoppable bull market.
Who cares that the Shiller P/E hit 29 today? It’s only the third highest ever, preceded by the Great Depression and Tech Bubble.
Who cares that the Federal Funds rate has been flatlined the past 8 years, and cannot be lowered any further to stimulate the economy? Mama Yellen will take care of us.
Who cares that the Federal Reserve quintupled its Treasury bond holdings over the past 8 years to $4.4 trillion dollars, which it still holds today and eventually will need to be sold?
Who cares that the market is trading at 129% of GDP, second only to the Tech Bubble? This time it’s different.
Who cares that even if the U.S. GDP growth rate doubled, and the market stopped rising completely, it would still be considered overvalued all the way to the year 2024 according to Buffett’s favorite indicator?
The rebuttal to all of these points has simply been, “The chains are coming off the U.S. economy.”
So I must assume, the release of these chains is going to double the entire U.S. GDP right? Meaning instead of growing 2-5% per year, it will begin growing 50-100% per year? That’s the only quantifiable method of justifying the current market valuation.