I just finished my favorite and best-informed report on the whole market economic situation. In almost every orthodox study, the stock market is overbought and overpriced. For instance, the market’s price-to-sales ratio is at an all-time high. The market’s capitalization to GDP ratio (this is Warren Buffet’s favorite indicator) is the second highest in history. The Shiller Cyclically Adjusted PE (CAPE) Ratio for the S&P is 27. That level has been exceeded only twice before in history – in 1929 and 2000. In other words, by almost all orthodox valuations, the current market is dangerously overvalued and way overdue for a correction or a bear market. This is the orthodox way of looking at this market.
Against this, we have the psychological view of the market. This bull market started in 1980. And because it has not reacted to orthodox views, it’s been hated by analysts and the public, who have been ... Log in or subscribe to continue reading.