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We’re in the third biggest stock bubble in U.S. history
Market Watch ^ | July 17, 2014, 7:27 a.m. | Brett Arends's ROI

Posted on 07/17/2014 8:19:18 PM PDT by RC one

1853, 1906, 1929, 1969, 1999

Pass the question around your office. Call your money manager and ask him or her, too. Post it on your office notice board.

Give up?

Those were the peaks of the five massive, generational stock-market bubbles in U.S. history.

Investors who bought into stocks around those peaks ended up earning terrible returns over the subsequent 30 years. Forget “stocks for the long run.” They ended up with “stocks for a long face.” The bigger the bubble, the worse returns.

And, according to a new research report, we are back there again.

U.S. stocks are now about 80% overvalued on certain key long-term measures, according to research by financial consultant Andrew Smithers, the chairman of Smithers & Co. and one of the few to warn about the bubble of the late 1990s at the time.

The five dates listed at the start of this article, he says, are the only times since 1802, when data began being tracked, when stocks have been 50% or more overvalued according to these measures. And only two of those bubbles — 1929 and 1999, both of which were followed by disastrous crashes — were bigger than today.

(Excerpt) Read more at marketwatch.com ...


TOPICS: Business/Economy
KEYWORDS: bho44djia; bhodjia; bhoeconomy; dowjones; market; stocks

1 posted on 07/17/2014 8:19:18 PM PDT by RC one
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To: RC one

Buy high! Sell low.


2 posted on 07/17/2014 8:25:08 PM PDT by NautiNurse (Obama sends U.S. Marines to pick up his dog & basketballs. Benghazi? Nope.)
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To: RC one
“Today Smithers argues that stock prices are first likely to go even higher, because they are being driven upwards by two forces. The first is the Federal Reserve’s ‘quantitative easing’ program - the policy of flinging money at the banks in the hope some of it doesn’t stick, but finds its way into the wider economy. The second is corporate buying. Under-appreciated at the moment is that the top buyers of U.S. stocks these days are the companies themselves. U.S. companies have been borrowing aggressively and using the money to buy their own stock.”
3 posted on 07/17/2014 8:25:16 PM PDT by sefarkas (Why vote Democrat Lite?)
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To: sefarkas

what could possibly go wrong with that?


4 posted on 07/17/2014 8:27:10 PM PDT by RC one (Militarized law enforcement is just a nice way of saying martial law enforcement.)
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To: RC one

“As research by Smithers and others show, the stock market boom since 2009 has almost exactly tracked the rapid increase in the money supply.”


5 posted on 07/17/2014 8:27:21 PM PDT by sefarkas (Why vote Democrat Lite?)
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To: RC one

The biggest thing the ma let has going for it is the players know even a hint of reality will lead to a severe global depression. So playing pretend is the best course of action.


6 posted on 07/17/2014 8:29:32 PM PDT by Bogey78O (We had a good run. Coulda been great still.)
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To: RC one

It has a lot higher to go yet. I hope some of you bought my picks in February ‘09 and December ‘13.


7 posted on 07/17/2014 8:34:01 PM PDT by montag813
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To: RC one
Corporate buy-backs occur after the board of directors determines the value of their own shares relative to the cost of debt. Companies offer debt instruments to the market when they want to preserve their equity position because business prospects are good. Companies offer equity when they want to share the pain. Stock-buybacks are the kissing cousins of offering debt, but stock-buybacks are generally funded with free cash flows rather than debt. It is a stock pickers market; a general swoon takes a policy change affecting a significant fraction of businesses in the economy. The most typical prospect change affecting business is a tax policy change. As bad as it is, current tax policy is predictable. Tax reform has been effectively taken off the table as part of the broader conflict between the House and the White House because the White House cannot be trusted to implement legislated policy.
8 posted on 07/17/2014 8:36:04 PM PDT by sefarkas (Why vote Democrat Lite?)
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To: RC one
The Federal Reserve's position: some_text
9 posted on 07/17/2014 8:40:47 PM PDT by boycott
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To: RC one

Yes, undoubtedly, it will come. I was trying to explain that to a guy the other day. I don’t think he was ready for all I unloaded on him, LOL.


10 posted on 07/17/2014 8:42:17 PM PDT by F15Eagle (1Jn4:15;5:4-5,11-13;Mt27:50-54;Mk15:33-34;Jn3:17-18,6:69,11:25,14:6,20:31;Ro10:8-11;1Tm2:5-6;Ti3:4-7)
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To: RC one

I’m in, and thus vulnerable, but what are the options? Cash is 100$ susceptible to inflationary devaluation or a collapse of the dollar. Banks are talking about charging people for depositing their money - instead of paying interest. Precious metals are all over the map, and real estate is also a risky investment.

Having said that, the market doesn’t seem to have much to do with reality.


11 posted on 07/17/2014 8:51:25 PM PDT by pieceofthepuzzle
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To: pieceofthepuzzle

100$ = 100%


12 posted on 07/17/2014 8:51:45 PM PDT by pieceofthepuzzle
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To: pieceofthepuzzle

Same here, almost all in.
Most of us here are pretty self-sufficient, if the SHTF.
My only rule, I won’t eat my dogs.


13 posted on 07/17/2014 8:57:12 PM PDT by tumblindice (America's founding fathers: all armed conservatives)
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To: pieceofthepuzzle

I think the lesson to take away is that now might not be the best time to jump in. Those already in will just have to keep playing the game.


14 posted on 07/17/2014 8:59:29 PM PDT by RC one (Militarized law enforcement is just a nice way of saying martial law enforcement.)
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To: RC one

It’s not going to crash until Obastard is out of office and some GOP-e schmuck is in that will get the full media blame for the crash.


15 posted on 07/17/2014 9:23:23 PM PDT by OrangeHoof (Every time you say no to a liberal, you make the Baby Barack cry.)
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To: OrangeHoof

I believe Bush did the first bailout for the same reason. I bet they didn’t think they could keep pumpin air in the bubble this long.


16 posted on 07/17/2014 9:36:30 PM PDT by huldah1776
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To: OrangeHoof

That’s possible. It assumes that the Obama holds a dangerous amount of sway over the actions of the Fed though does it not?


17 posted on 07/17/2014 9:38:54 PM PDT by RC one (Militarized law enforcement is just a nice way of saying martial law enforcement.)
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To: pieceofthepuzzle
but what are the options?

Which is exactly why the stock market should keep going up. Inside the matrix, it is still the best place to put money, so people are putting it there. It will fall when that is no longer true, but not before.

18 posted on 07/17/2014 9:45:38 PM PDT by Vince Ferrer
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To: OrangeHoof

Actually, I’m betting on Sept. of next year.


19 posted on 07/17/2014 10:29:13 PM PDT by Carbonsteel
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To: pieceofthepuzzle
I’m in, and thus vulnerable, but what are the options?

That's the key point. There are no other options. Let's say, for the sake of argument, that during the other bubbles bonds were paying 5%. So there were real choices for those getting nervous.

But now it's either take stock risk or rotate into bonds paying 1 or 2%. That's not even keeping up with inflation. With no other option, people are going to stay put, giving this bubble a ways to go, IMHO.

20 posted on 07/18/2014 4:20:23 AM PDT by Leaning Right (Why am I holding this lantern? I am looking for the next Reagan.)
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To: OrangeHoof
“It’s not going to crash until Obastard is out of office and some GOP-e schmuck is in”

Well said, that’s what I believe also, the FED is in the democrats back pocket and will do everything possible to make it as you said.

21 posted on 07/18/2014 4:27:42 AM PDT by 2001convSVT (Going Galt as fast as I can.)
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To: RC one
That’s possible. It assumes that the Obama holds a dangerous amount of sway over the actions of the Fed though does it not?

He showed a dangerous amount of sway over Justice Roberts to pass ObamaCare, didn't he?

22 posted on 07/18/2014 7:19:41 AM PDT by OrangeHoof (Every time you say no to a liberal, you make the Baby Barack cry.)
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