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Perplexing Stock Market

Posted on | September 21, 2009 | 2 Comments

If you look at the current Price Earnings Ratio, the overall stock market is seriously overvalued. But the market keeps going up, closing today at an 11 month high. I am not complaining, really. I am long on some stocks, but I am gettting close to what I consider a fair value on my General Electric stock. But the common wisdom is that the market is pricing in an economic recovery.  Really? With 10% unemployment. The consumer is 2/3 of the economy, so if we ain’t spending then there is no recovery on the topline growth. It seems to me that economists take a hit of marijuana and then issue their statements. There is no relationship to reality.

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Comments

2 Responses to “Perplexing Stock Market”

  1. Stock Pursuit
    October 4th, 2009 @ 6:01 pm

    yeah, I don’t get the massiveness of this run either. I think it is obviously just from stimulus that we’ve managed to not collapse totally. The only question I ask myself and I’m not sure of is what kind of a lasting effect could 0% rates and stimulus have after they are over? From my understanding any gov stimulus is temporary. I think we are setting up like Japan. The other thing I don’t think people realize is rising housing prices are and have been the backbone of consumers along with cheap credit. That has all changed. For long time i think.

  2. chroma
    October 6th, 2009 @ 8:10 pm

    I couldn’t agree with you more.

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