I read this article, “Stock market bubble warning grow louder,” last week. I found this excerpt interesting:
“‘The United States stock market looks very expensive right now,’ [Nobel Prize-winning economist] Robert Shiller wrote in a recent column for The New York Times.*
Shiller, a Yale University professor who is often cited as one of the most influential people in economics and finance in the world, created a metric that compares stock prices with corporate profits. The metric recently climbed above 25. That level has only been surpassed three times since 1881: 1929, 1999 and 2007.
Steep market tumbles followed each instance, including the bursting of the dotcom bubble in the early 2000s. The Nasdaq still hasn't fully recovered from that meltdown.
The Yale professor sounds bewildered by the lofty valuations for the stock market, which has nearly tripled since the March 2009 bear market lows.”
How about because the Federal Reserve has kept interest rates so low for so long that there is nowhere else to invest.
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Dr. Shiller’s article in The New York Times is here.
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