Salient to Investors: P/E ratios among the 50 largest companies in the S&P 500 Index deviate from the mean by an average 22%, nearly the lowest on record since 1990. An average of 380 Index companies rose in each of the last 5 years, versus 307 in the 1990s. In 2007,
READ MORE... →Salient to Investors: The stock market is massively overvalued based on multiple measures due to crony financial leverage that has created wealth inequality that is now the worst we have seen during multiple generations. The PE ratio of the S&P 500 is 24.9, or 80 percent higher than the historical
READ MORE... →Salient to Investors: Nobel Laureate Harry Markowitz said: Booms and busts happen and every time is different in terms of the fundamental causes. 2008 didn’t change the historical probability distribution of returns. 2008 was not an outlier event but a one-in-40 event and was not the worst year of return.
READ MORE... →Salient to Investors: Jeremy Grantham at GMO said: Commodity prices fell for a hundred years by an average of 70 percent, and then from 2002 basically everything tripled and regained the whole decline in 6 years – tobacco was the only commodity that fell. The game changed because of the
READ MORE... →Salient to Investors: Katja Taipalus at the Bank of Finland said asset prices have been one of the main components as financial crises have built up, while bubbles have common characteristics. Taipalus said a bubble is people believing that prices will go up and that they can exit the market before it
READ MORE... →Salient to Investors: Adam Nash at Wealthfront writes: Author Edward Chancellor found bubbles contain two ingredients, uncertainty and leverage. In almost every bubble, some form of innovation or insight forces people to rapidly debate the creation of new economic value. typically compounded by a lottery effect, exacerbating early pay-offs for
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