Stock Indices

The S&P 500 is considerably overvalued - somewhere in the range of 34% to 61% - depending on which of 4 market valuation indicators are used and whether the valuation is based on the arithmetric or geometric mean of each. While these findings are not useful as short-term signals of market direction...they play a role in framing longer-term expectations of investment returns and suggest a cautious outlook and guarded expectations. [Here are the details.] Words: 676

Valuation-based forecasting models leave little doubt that stocks are priced to deliver very poor long-term returns and the cyclical bull market from 2009 is an extreme move that will almost certainly be followed by a violent correction. [Let me explain.] Words: 701

Mark Spitznagel...warned the other day that the S&P 500 could lose 40% of its value in the next couple of years. So what black swan event could cause the S&P 500 to drop down to 760? [Let's take a closer look.] Words: 856

Hot headlines about the Dow “storming back soon,” soaring to the “Next Stop, Dow 20,000” is nothing more than a new cycle of irrational exuberance. After losing an inflation-adjusted 20% the last decade, a prediction that the Dow will roar back 80% anytime soon is misleading, pure speculative hype. Reminds me of book titles like “Dow 36,000” and “Dow 100,000” back in 1999 - and memories of those mutual funds selling with absurd multiples over 40, with annual returns in excess of 100%. Worse than the tulip-bulb mania of the 1590s. What’s really roaring back is hype, happy talk and irrational exuberance. Words: 531

The odds of returning [to] the gloom-and-doom scenario of 2008 is quite unlikely but [I have identified several events which could occur and derail your portfolio unless they are closely monitored. Here they are.] Words: 674

Corporate America has been flying high since the recession, barely looking back since March 2009. The 70% rally in the S&P 500 in just under 2 years has been astounding to say the least - but are we really in 70% better shape as a nation since March 2009? No way! The dollar has continued to decrease in value, investments that feed off fear like gold and silver have soared....housing prices are still as low as in 2009, when they "crashed." The signs of a major market correction...[are] right in front of us... no one seems to notice [but I do]. I believe we could soon experience a market correction of from 15% to 20%. Let me explain why. Words: 913

In the face of lackluster economic growth and no hopes for new stimulus anytime in the near future, the global tightening cycle may force the market back into a deflation scare. Either way, caution remains warranted in such an environment. [Let me explain further.] Words: 568

[One look at the P/E ratio of the S&P 500 these days clearly suggests that] the market is overly worried about the future. Put it this way: [were one to] apply the S&P 500 average earnings multiple of 16.94 from 2004 through 2007 to Wall Street’s earnings forecast for 2012 would give us an S&P 500 of 1,891! Words: 400

A market is not built solely on fundamental realities, but how broadly those realities are expected by investors. So it goes without saying that it can be very insightful to compare market expectations to reality. When expectations are high there is the likelihood for disappointment. When expectations are low there is a potential for upside surprise. There is actually an index that measures the relationship between economic reality and crowd expectations. It is the Citigroup Economic Surprise Index (CESI). [Let's take a look at what it is saying these days.] Words: 773

This quarter’s mid-period has a negative focus [and we are] now seeing the result - a growing belief that the stock market run is over. [If that is, indeed, the case then it is most important to know exactly how to take advantage of the buying opportunities that are about to come about. Here's what you need to know to do just that.] Words: 925