We are absolutely in a stock market bubble
Once again the stock market is in full bubble mode. The internet chat
forums are full of people pumping up stocks and you also have penny
stocks surging in light of people looking for the next free lunch. The stock market is a poor indicator
of the overall economy but it does show how those with disposable
income to invest are thinking. Even on more conservative investing
boards, those that advocate dollar cost averaging into broad based
mutual funds or stocks, you have people throwing caution to the wind and
trying to time the market or go all in on stocks fully ignoring bonds
as a part of a balanced portfolio. The market was already overvalued
earlier this year and the froth continues to build. The Crestmont P/E of 26.3 is now 90 percent above its average of 13.9.
Valuations are off the chart and euphoria is setting in. You even have
penny stocks going up in rocket rides up which was very common during
the tech boom of the 1990s. At the same time, you have inflation eroding the purchasing power
of regular Americans not participating in this casino. All the signs
are there: massive speculation, unexplainable valuations, and blind
optimism. All signs of a bubble top when the fundamentals don’t make any
sense.
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