4 ms·

Dow loses 1,300 points erasing nearly all advances under the Trump presidency

• aazaa 7y ago
  After all this, stocks are still overvalued by historical standards: https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio Perhaps surprisingly, this even ignores the inevitable hit to earnings Q1 will bring. Factor that in, and fair value on the S&P is way, way lower from here. Throw in the inevitable massive distortions of the economy through the Fed's institutional panic moves, and who knows where fair value lies. I'm not sure many people realize that there are two simultaneous and very grave crises happening at the same time: COVID-19 and the return of the Great Financial Crisis.
  • ohiovr 7y ago
    And in a panic stocks can dip far below what would normally be a fair value before beginning to recover.
  • mardifoufs 7y ago
    What does overvalued even means? You cannot compare historic prices in isolation. Value is relative, so while yes ratios are higher and have been higher the past few years, stocks were still undervalued compares to bonds, real estate, commodities etc. It's useless to compare 1980s stock prices when interest rates were at 13% to now. That's why you usually see the "stocks are a bubble, too expensive" from retail investors that just cannot understand relative value and fixate on the "good old times". It's simple, getting 13% returns on bonds meant that stocks would always underperform in terms of yield so they had a lower relative value. This is why no one professional investor is waiting for a return to those level. Because they would be impossible and non sensical.
• perl4ever 7y ago
  If you're going to write this story, fine, but maybe wait another day so you don't have to write "nearly"?