Salient to Investors:
Mark Hulbert writes:
- The stock market may be overvalued and could begin a bear market but it does not resemble the bubble market in 2000.
- The explosion of bubble warnings is unwarranted. The 5 identifiers found by JeffreyWurgler at NYU and Malcolm Baker at Harvard in stock market bubbles since the 1920s are all absent today:
- IPOs in the last 90 days numbered 69 versus 123 in Q1, 2000. The number in Q1, 2015 was a 2-year low.
- The average first-day IPO return in the last 90 days was 17.6% versus 96% in Q1, 2000.
- Dividend-paying companies have a 37% higher price/book ratio than non-dividend paying companies: in the 2000 bubble, non-dividend paying companies had a 43% higher price/book ratio than dividend-paying companies.
- The proportion of corporate cash coming from equity issuance is less than half as much as in Q1, 2000.
- Share turnover is at 62% versus 89% in Q1, 2000.
Read the full article at http://www.marketwatch.com/story/beware-of-the-bubble-in-stock-market-bubble-warnings-2015-08-11
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