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The Bubble Is Back and Everyone’s A Bull

Lots of interesting data in this Business Insider piece…

Sentiment figures from the American Association of Individual Investors, The National Association of Active Investment Managers and the Investment Company Institute’s mutual fund cash levels are all flashing bullish numbers at or above the 2007 highs. If you have watched or read any of the financial media in the past month, you have seen analyst after analyst and strategist after strategist proclaim the bear market is dead and the bull market has nowhere to go but up. (IE: Bloomberg survey showed 13 out of 13 strategists were bullish, USA Today had 5 out of 5 bullish and Barron’s famed Round Table had 10 out of 10 bullish participants.)

Unfortunately, the hard data doesn’t support the bullish thesis.

  • S&P 500 P/E Ratio is over 16x, while Shiller’s CAPE is over 23x The 5 year average P/E Ratio is over 33x
  • Bullish Percent Index for the S&P 500 is over 86% (80% is a sell signal)
  • 90% of stocks are above their 200 day moving average, 2007 peaked at 91%, then the market collapsed.
  • Case Shiller index shows the housing market is giving indications of a double dip in process
  • 30 Year Treasury interest rates are up 33% off their low, driving the bond price down almost 13%
  • According to recent Fed minutes, they believe more stimulus is needed
  • Congress was elected with a mandate of austerity, not growth.
  • Federal Debt to GDP still in the 100% territory according to Fed data
  • Total Debt to GDP still just under 400%, according to Fed data


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