06-03-2012, 05:14 PM
Hall of Fame Poster
Join Date: Jan 2007
Re: Weak Economy Points to Obama’s Constraints - NYT (LMFAO)
Originally Posted by shmessy
How is the stock market "artificially inflated"?????
The S+P 500 P/E ratio is at historic norms:
S&P 500 PE Ratio
In fact, the only time the stock market was "artificially inflated" regarding P/E's was during the last months of W.
In fact, the table shows the P/E's of the past two years are well below ANY of the eight W years. ANY. Whose stock market was "artificially inflated"???????
S&P 500 PE Ratio by Year
Company current earnings are right in line with historic norms with their stock prices. There's nothing "artificial" about that - - - unless you believe the private sector is uniformly cooking their books also.
To your point, it would be nice if people invested in the stock for solid reasons like P & E ratio's, but that's no longer the case. People dump money into the stock market when they believe a bull market is upon us and get out when they think it's a bear market.
Therefore, the public's perception of our economy is now the main-driver of bear/bull market runs. The fact the the $900B stimulus temporarily created the perception that our ecomomy was recovering, drove people back into stocks and artificially inflated it.
Even P & E ratio's aren't that believeable any more. Our banks are allowed to keep bad debt "off the books" thereby over-inflating or mis-stating their true financial condition.
If your statement that P&E ratio's are back to historical norms and stocks are a good value, why has the stock been tanking lately?
Now how much would you like to bet that Bernanke is loading up for another round of quantitative easing? And if that happens, watch the stock market rise again....and that would also be a temporary artificial inflation, wouldn't it?
"No one walking this earth knows what is truly righteous"
Last edited by PatriotsReign; 06-03-2012 at 05:16 PM..