Tuesday, December 10, 2013

Is David Stockman The Only Other Person On The Planet Aware Of The Massive Bubble In The Russell 2000?

Stockman points to the Russell 2000 trading at a PE of 85 and the Federal Reserve’s complicity in the Wall Street fraud that created it; something that has been noted on here many times.  This is an index of 2000 companies not a company or two or ten.  There are a plethora of idiots out there right now telling us that markets are not a bubble.  This is just like in 2000 and 2007 when the same general crew of idiots were telling us there was no bubble then either.  Bubbles can get larger and larger and larger.  Ours has been building for over three decades.   But there are many reasons to believe it is close to popping. 

There is absolutely no parallel in U.S. history for this level of valuation on such a broad level.   The Russell 2000 is discounting 85 years of earnings.  Think about that.  WTF were you doing 85 years ago?  That would be 1929.  Well, I’ll tell you what most companies 85 years ago were doing.  They were getting ready to go out of business.  The Russell 2000 and the companies in it weren’t even around in 1929.  And 90+% of the companies in 1929 aren’t around today. 

The bubble in the S&P is wildly large as well.  Forget about what you think you know.  Or what financial idiots tell you.  A PE of 18 is not an accurate representation of the bubble in the S&P.  Not to say that a PE of 18 is reasonable.  Can you predict what is going to happen in 18 years?  Are you willing to pay that level of price.  But, that’s not the real bubble in the S&P.   The real valuation of the S&P is much, much richer than at any time in our history.  I’ll leave it at that.  

posted by TimingLogic at 3:10 PM