Well that should teach me never to go on vacation again. I blogged pretty intensively for just over two years, from February 2009 through March 2011. This frenzied activity was correlated with (or caused?) one of the great bull markets in American stock market history. Then stocks started falling. I had planned to return to blogging on July 5th, after a short vacation. But with the market doing so poorly I felt duty bound to do something last week, and hence I came up with a few posts. The effect on Wall Street was immediate and electrifying.
But (seriously) are stocks now overvalued? Because I’m an efficient markets-type, the only answer I can give is no. So why does Robert Shiller say yes? Apparently because the P/E ratio is relatively high by historical standards. And he showed that for much of American history investors did better buying stocks when P/Es were low than when P/E ratios were high. Of course hindsight is 20-20.
Read Full Article »